AnnualReportandAccounts · 12 January 2010, 23 March 2010, 18 May 2010, 1 June 2010, and 23 June...

Annual Report and Accounts

2009/2010

Chairman’s statement 4

Annual report of the Board of Governors 7

Report of the independent auditors to the Board of Governorsof the University of Hertfordshire 24

Consolidated income and expenditure account 26

Financial statements 27

Balance sheets 28

Consolidated cash flow statement 30

Statement of principal accounting policies 31

Notes to the accounts 35

Board of Governors 63

Members of the executive team 64

List of major donors 66

Contents

Chairman’s statement

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The University in 2009/10 hasstrengthened further its position withinthe Higher Education sector and it ismy pleasure to highlight some of thekey accomplishments that theUniversity achieved during the year.

These achievements have beendelivered from a sound financial baseand these accounts report anoperational surplus of £2.7 million forthe year and an improved balancesheet. In drawing up its plans for2010/11 the Board is confident thatthe University will again achieve asurplus. However, in the light of theannouncements in October 2010 onthe Comprehensive Spending Reviewand the publication of therecommendations of the IndependentReview of Higher Education Fundingand Student Finance by Lord Browne,the Board will need to assess theimplications for the University andmake adjustments where necessary toits longer term plans from 2011.

The University has seen a dramatic rise in thenumbers applying to be admitted to itsundergraduate full-time courses over recentyears. Applications for entry in September2010 were such that very few places wereavailable in Clearing and entry standards tocourses have risen substantially. Thispopularity is not only down to the continuingdemand for higher education but to thegrowing profile of the University in the sector.

We were delighted to receive externalendorsement of this growing profile. In 2010,we were shortlisted for the Times HigherEducation Entrepreneurial University of theYear Award. The University rose in the‘University Guide for 2011’ league tablepublished by the Guardian from ninety-sevento sixty. In the Independent CompleteUniversity Guide 2010 we were placed forty-one out of 115 universities, up nine placesfrom the previous year. In the Times GoodUniversity Guide 2010 we ranked sixty-threeout of 115 UK universities, up three placesfrom the previous year. In the 2010 People &Planet Green League, we rank third out of 122UK universities.

The academic achievements and successes ofindividual departments and staff are toonumerous to mention but highlights are:

• The School of Pharmacy was awarded fullRoyal Pharmaceutical Society of GreatBritain accreditation and Professor SorayaDhillon MBE, Head of the School ofPharmacy was appointed new DirectorGeneral of the Pharmaceutical Council.

• In research, our Centre for AstrophysicsResearch discovered some of the mostdistant galaxies ever observed and theUniversity achieved the highest percentagesuccess rate nationally for Research CouncilUK research grant applications at thirty-three percent.

• Our environmental performance wasrecognised as the University received ahighly commended Green Gown Award forcontinuous improvement in wastemanagement. In the ‘Universities that Count’Environment Index the University received asilver ranking which was above the HEI andbusiness sector average.

• Improvements to the University’s estatecontinued, all targeted at improving thequality of the Student Experience. TheUniversity opened The Forum. This £38million entertainment and social complex isone of our most exciting projects to date.

• Work started on the new Law Court Buildingat the front of the de Havilland Campus, aswell as a new reception area. The GarfieldWeston Foundation have generously agreedto donate £250,000 to support thedevelopment of this building. Their donationattracts a naming opportunity and the newreception area will be named after theFoundation.

• A new Student Experience Strategy waslaunched not only to develop studentfacilities but look afresh at approaches tokey issues identified in the National StudentSurvey (NSS) such as feedback and courserepresentation.

• The University harnessed new technologiesand systems to help improve the quality ofservice. The University was the first Britishuniversity to implement Active Reception, aninnovative live chat and monitoring softwaresolution to enhance the student experienceduring Clearing.

• A new finance system was introduced andwork to bring a new human resourcessystem online was well advanced with anew student system not far behind.

All of this was underpinned by the publicationof a new Strategic Plan for 2010/15.


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There have been many examples of studentachievement and again I must draw attentionto the continuing outstanding success of theFormula Student team, which at the FormulaStudent event at Silverstone in July came fifthoverall and were again the top UK studentteam.

Our student sporting achievements have beenconsiderable this period. Five University ofHertfordshire Athletic Union (UHAU) sportsteams won their respective leagues - Women’sBadminton, Netball 1sts, Fencing, Women’sTennis and Men’s Tennis. As a University weachieved a top 50 finish in the BritishUniversity and Colleges Sport (BUCS) leaguewith individual BUCS achievements from LeahRobson who finished second in theTrampolining Championships, LawrenceLowman who finished 3rd in the 800m and1500m freestyle events in Long CourseSwimming Championships and JonathanGoodman and Jennifer Wilson who wonbronze at Archery and Karate Championshipsrespectively.

One of our student’s, Jackson Wray, wasselected for England Rugby U18’s and DaveBell, another student, won European UniversityGold at the European University SportsAssociation (EUSA) championship inAmsterdam. Ten of our students woninternational caps representing their respectivecountries in women’s football. We alsowelcomed Eric Mathias from the British VirginIslands (BVI) as the first athlete to visitHertfordshire Sports Village as part of a pre-games training camp agreement with the BVIfor the 2012 Olympics.

The University expresses its gratitude to thoseorganisations and individuals who continue tosupport scholarships which are available tostudents of the University.

All of these achievements would not bepossible without the commitment and abilitiesof the staff of the University, to whom theBoard and I express our gratitude, especiallyagainst the backdrop of the challengingeconomic environment. My thanks also go tothe ongoing commitment to the members ofthe Board of Governors who again have givenof their time freely and participated in anextremely busy year especially with the reviewof the ‘Size and Shape of the Board’ and theappointment of a new Vice-Chancellor. Inlearning of the intention of the Vice-Chancellor,Professor Tim Wilson, to retire at the end ofDecember 2010, the Board acknowledged theenormous contribution Professor Wilson hadmade not only to the development of theUniversity but also to the reputation andstanding of the University in the outside worldsince he took office in 2003.

I am delighted that we have been able toappoint Professor Quintin McKellar as our newVice-Chancellor from January 2011. As thecurrent Principal of the Royal VeterinaryCollege, Professor McKellar not only has adistinguished academic and leadership record,but he knows the county of Hertfordshire andthe surrounding region well. He will be able totake forward the newly agreed Strategic Planand ensure the University capitalises on itsachievements and continues to be relevantand modern meeting the needs of its studentsand society at large.

Mrs Jo ConnellChairmanBoard of Governors

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Annual report of the Board of Governors

In presenting its review to accompany theAccounts, the Board is aware of itsresponsibility to determine the educationalcharacter and mission of the University and toset its general strategic direction. The reportcovers the following:

• Activities of the Board

• Membership of the Board

• Operating and Financial Review

Activities of the BoardThe Board met on eight occasions during theyear - 20 October 2009, 25 November 2009,12 January 2010, 23 March 2010, 18 May2010, 1 June 2010, and 23 June 2010 with anaway day on 2 February 2010. It proved aparticularly busy year for the Board in seekingand then appointing a new Vice-Chancellorand in conducting a review of the ‘Size andShape’ of the Board in addition to its normalprogramme of activity.

The Board continued to discharge its primaryresponsibilities set out in the Articles ofGovernment with enthusiasm and duediligence. It determined the educationalcharacter and mission of the University whilstensuring the efficient and effective use ofresources, solvency and the safeguardingof assets.

The Vice-Chancellor made a presentation tothe November meeting, reviewing the year2008/09 and proposing targets for 2009/10. Inreflecting upon the University’s achievementsin 2008/09 he drew attention to its improvedperformance in the National Student Survey,the excellent outcome of the Institutional Auditby the Quality Assurance Agency and theresults of the 2008 Research AssessmentExercise (RAE) which had led to the Universitybeing ranked fifty-seventh in the league tableof University research performance by theTimes Higher. He further reported on theexcellent work to develop the Strategic Planfor 2010/15 and the strengthening of therelationship with the Students’ Union, a

relationship which was crowned by thecompletion of the flagship Student Forumbuilding over the summer of 2009 whichbrought some of the best studententertainment facilities in the country to theUniversity. In his presentation, the Vice-Chancellor drew attention to the substantialimprovement in the University’s financialposition since the beginning of the financialyear. He paid tribute to staff across theinstitution whose efforts had enabled theUniversity to deal successfully withrestructuring and new challenges.

A major item of discussion was the StrategicPlan for 2010/15. This was approved at theOctober meeting but a considerable amount ofwork and discussion took place in the springand summer meetings on how the StrategicPlan would be monitored. Of particularimportance were the Key PerformanceIndicators (KPIs) that related to the drivers andenablers identified in the plan. The Boardapproved a comprehensive set of KPIs revisedto demonstrate progress against these driversand enablers.

The Board also focussed on the critical issueof student recruitment. The University hadexperienced an unprecedented increase inapplications to full-time undergraduateprogrammes over the last few years and thiscoupled with an unexpectedly high rate ofconfirmation of offers at Clearing andsubstantial take up of places by applicantswho had placed the University as their secondchoice, led to the University over-recruitingfull-time undergraduates. The Board learned ofthe significant effort to control as accurately aspossible the level of the full-timeundergraduate entry for September 2010within the limits laid down by the FundingCouncil to correct over-recruitment in 2009.

Another substantial item was the continuingwork on the size and structure of the Board.Following upon the recommendations of theeffectiveness review of the Board whichreported in Summer 2009, the Board agreed toa full review of its size and structure. To assist

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them in this the Board appointed twoacknowledged experts in Higher Educationgovernance, Professor Robin Middlehurst ofKingston University and the LeadershipFoundation and Mr Allan Schofield also of theLeadership Foundation. They produced acomprehensive report looking at the variousoptions, and accordingly, following a fulldiscussion, the Board agreed to haveproposals drawn up by a group of its membersfor consideration in Autumn 2010.

The formal proposals to create the Corporationas the ‘sole trustee’ of the University ofHertfordshire Charitable Trust took effect at themeeting of the Board on 20 October 2009. TheBoard approved the arrangements forsupervising the activities of the Trust principallythrough the work of its committees.

A Community Engagement Strategy waspresented to the Board which emphasised thevalue of the work already being undertakenand by working together with public bodiesand other organisations in the community agreat deal of value added could be derivedwithout the need for increased expenditure.The Board welcomed this pragmatic yetproactive approach.

The International Engagement Strategy wasalso considered. Acknowledging the vitalimportance of such engagement not only forthe University, but Higher Education and thecountry as a whole the Board asked that thearrangements for international engagementbe discussed at the Board away day inFebruary 2011.

In addition to the regular reports of itscommittees, Finance and General Purposes,Employment (which was renamed Student,Employment and Quality), Business Review,Development, Audit, Nominations andRemuneration, reports were made on andconsideration given to the Annual Accounts for2008/09, the Budget for 2010/11, majorprojects and the proposal to revise the EstatesStrategy, Honorary Awards, the University

Court, risk management, academic qualityassurance and enhancement, equality policies,health and safety and the Committee ofUniversity Chairmen (CUC). The away daylooked at the developing Student ExperienceStrategy with the Board re-affirming itsfundamental commitment to improving stillfurther the quality of the student experienceand then looked at progress in delivering thebusiness-facing strategy.

The Vice-Chancellor, Professor Tim Wilson, ata special meeting in January 2010, announcedhis intention to retire from the University at theend of 2010. In accordance with its terms ofreference the Board asked its NominationsCommittee to supervise the search process forthe appointment of a new Vice-Chancellor.After an extensive search and a process whichinvolved all members of the Board, ProfessorQuintin McKellar currently the Principal of theRoyal Veterinary College, was appointed asVice-Chancellor of the University fromJanuary 2011.

Upon the retirement of Mr Terry Neville asDeputy Vice-Chancellor and Director ofFinance in December 2009, and to whom theBoard paid tribute for his enormouscontribution to the development of theUniversity, the Nominations Committee actingin its capacity as the Appointments Committeeappointed Mr Alistair Moffat as Group FinanceDirector. Mr Moffat took up office inNovember 2009.

Finally it was with great sadness that theBoard noted, after long periods of illness, thedeath of Professor Mike Pittilo the Vice-Chancellor of Robert Gordon University andformerly Pro Vice-Chancellor at the Universityof Hertfordshire. The Board was represented atthe memorial service.

MembershipThe Board, through its NominationsCommittee and involving the independentmembers where required by the Instrumentand Articles of Government, considered a

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whole range of membership issues. Mr DavidGoodridge began a term as an independentmember following serving as a co-optedmember and Mr Colin Gordon and Mr JohnHeywood were re-appointed as independentmembers. Miss Jane McCue and Mr PeterBlock joined the Board as co-opted members:Miss McCue as the member with expertise inhealth matters and Mr Block serving in apersonal capacity. Ms Linda Haye commenceda further term of one year serving as a co-opted member. Mrs Lynn Karstadtcommenced her term of office as the teacherof the University nominated by its AcademicBoard and Miss Dawn Hamlet joined theBoard as a student of the Universitynominated by its students. Proposals from theNominations Committee for membership from1 September 2010 were approved.Mrs Jo Connell, Mr Alan Graham, Mr NigelMatthews, Mr Gordon Morrison and Mr JimPark were appointed as independent membersfor further three year terms and ProfessorMichael Elves was appointed for a furtherperiod of one year as an independent member.Ms Yasmin Batliwala was appointed as anindependent member for a three year term ofoffice.The Board also appointed Mr PeterBlock and His Honour Judge Baker asindependent members for three year termshaving both served previously as co-optedmembers. Mr Robert Gordon and Mr DwainNeil were appointed for three year terms from1 September 2010 as co-opted membersserving in a personal capacity and Ms P H deKoenigswarter was welcomed to the Board toserve as the student of the Universitynominated by its students for the period 1 July2010 to 30 June 2011.

The Board made a number of appointments toChairmanships from 1 September 2010. MrsJo Connell was re-appointed as Chairman ofthe Board for a further three years. Mr ColinGordon became Vice-Chairman of the Boardand Chairman of the Finance and GeneralPurposes Committee and also of the Major

Projects Committee. Mr Peter Block becameChairman of the Student, Employment andQuality Committee. Mr John Heywood becameChairman of the Audit Committee.

The Board, at its Annual Dinner in June 2010,paid tribute to its retiring members. Mr TrevorHarrison stood down after nine yearsmembership of the Board and additionalservice as an external co-opted member of theAudit Committee. Latterly he had served asChairman of the Audit Committee and Vice-Chairman of the Board. The Rt RevdChristopher Foster stood down after eightyears service consequent upon hisappointment as the Bishop of Portsmouth. Forthe past three years The Rt Revd Foster hadbeen the Chairman of the Finance and GeneralPurposes Committee. Ms Linda Haye hadcompleted four years of service as a co-optedmember serving in a personal capacity andMiss Dawn Hamlet completed her term as therepresentative of its student body.

Operating and Financial ReviewThe Operating and Financial Review considersthe University’s activities in the year 2009/10 inthe context of the challenges and risks withinwhich it operates, and comprises the followingsections:

Section 1: Context and risk analysis• The University of Hertfordshire in the Higher

Education sector• Strategic Plan• Risk awareness and mitigation• Commercial activity

Section 2: Academic review• Students• Research and knowledge transfer

Section 3: Corporate responsibility• People and culture• Sustainability and environment• Community

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Section 4: Financial• Key financial highlights• Review of the year• Capital projects• Investments

Section 5: Corporate governance

Section 1: Context and risk analysisThe University of Hertfordshire hassuccessfully positioned itself in the sector asthe leading business-facing university. Wehave established a thoroughly ambitious andentrepreneurial university with superb facilitiesand a close relationship with industry,commerce and the public sector. We strive toput the experience of our students first by ourefforts in distinguishing them for beinginnovative, creative, highly employable andequipped for their future careers.

General operating environmentThe University has been very aware of thefundamental re-examination of public sectorexpenditure following the election of thecoalition government in May 2010. Theassumption made by the Government in theComprehensive Spending Review is that thephased withdrawal of the majority of publicfunding for teaching will be replaced by anincreased graduate contribution. The model forsuch a contribution will take into account, butnot adopt in entirety, the recommendations ofthe Browne Review of Higher EducationFunding and Student Finance, commissionedby the previous government, which includedthe removal of the cap on student fees with aprogressive levy on charges in excess of£6,000 per year. The Government will proposeits model for funding in a forthcoming WhitePaper, to be followed by a Bill to Parliament in2011. This legislation, if passed, will affect thecohort of students starting at university in 2012.

Strategic PlanThe University reviewed its vision, mission andvalues and agreed its Strategic Plan for thenext five years during 2009/10. In recognising

that the Strategic Plan (2007/12) has beensuccessful in positioning the University ofHertfordshire as the UK’s leading business-facing university, the 2010/15 Plan will buildupon this success and present a clear focusfor the University as an innovative andenterprising university.

Our visionWe will shape the next generation of business-facing universities. We will continue to be anexemplar in the sector and we will play aleading role in addressing the economic andsocial challenges facing the UK in increasinglycompetitive global markets. Innovation,creativity and an enterprising mindset will bethe defining characteristics of our University.We will provide flexible and transformationallearning and commit to adding value to ourpartners and delivering positive and productiveengagements with business, industry and theprofessions. The University will continue toplay a central role in the local and regionaleconomy, contributing positively to its socialand economic development, and we will buildour international profile and global reputation.

Our missionAn innovative and enterprising university,challenging individuals and organisations toexcel.

Our valuesThe following core values will inform andsustain all of our activities. We aspire to be:• Student-centred• Innovative, creative and enterprising• Committed to supporting and developing our

people• Focused on excellence and its celebration• Dedicated to enjoyment in learning and work• A place of integrity where the individual is

respected

Our strategic focusWe will deliver our vision through a focus onfive key strategic drivers:

• Student experience• Learning and teaching• Employability and entrepreneurship• Research, innovation and enterprise• International engagement

The delivery of these drivers will beunderpinned by our:

• Academic profile• People and culture• Financial strength• Infrastructure and sustainability• Community engagement

Each of these ten areas will be supported by adetailed strategy and action plan. A set of KeyPerformance Indicators (KPIs) for each areawill provide the basis for monitoring progressand help to define the future size, shape andprofile of the University.

Key Performance Indicators (KPIs)The University has adopted a revised set ofKPIs which are used by the Board ofGovernors to monitor the overall strength ofthe University. Areas covered include: studentrecruitment, retention and employability,financial health and achievement of budget,volume and nature of business interactions,general management and organisationaldevelopment. Key facts and figures relating toincome and expenditure for the year are setout in Section 4 on page 17.

The KPIs are monitored constantly by theBoard of Governors and are updated on anannual basis. During the year the Universityhas performed well against the majority of itschosen measures and the majority of its keyinternal targets set for 2009/10 have been metor exceeded. In addition, the University hasalso created a target profile which it intends toachieve by 2011/12. This sets out theUniversity’s broad aims in the areas of studentexperience and institutional achievement in theHigher Education context by the end of thisperiod. This profile is also monitored by theBoard of Governors.

Risk awareness and mitigationRisk assessment and management isembedded in the institution, and risk registersare prepared at project level, StrategicBusiness Unit level and institution level. At thestrategic level, ten key risks have beenidentified which relate to delivery of theUniversity’s Strategic Plan and goodperformance against the KPIs. The major riskswhich the University has identified includerecruitment and retention of students, and theposition of the institution in a difficult futureeconomic climate. Key risks and mitigatingactions are monitored by committees acrossthe University and reported to and monitoredoverall by the Audit Committee. The currenteconomic climate and events pose a significantfinancial risk to all business and universitiesalike. As stated in our investment policy below,the University manages its investment portfolioand cash reserves in such a way as to mitigatethis risk as far as possible.

Commercial activityAs a business-facing University, Hertfordshirehas been growing its income from the deliveryof a wide range of services to the businesscommunity and the general public through itssubsidiary companies. Examples includeExemplas Holdings, which provides asignificant proportion of the group’s business-to-business activity interacting with over100,000 businesses in the UK providing aprogressive route from the delivery of low levelskills within the workplace through to highlevel skills provision within the University, andUno which is now the largest independent buscompany in the region carrying over 6.5 millionpassengers per annum.

The income from the subsidiary companies isbecoming an ever more important aspect ofthe University of Hertfordshire group’s activityamounting to £68 million in 2009/10, increasingby 9.6% over the previous year despite thedifficult economic climate, and now represents30% of the total group income which can beseen from the chart on the next page. The

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subsidiaries are all run at an arm’s length basisand delivered profits for the year before gift aidand tax in excess of £8.6 million.

Source of total group income 2009/10 (£m)

Section 2: Academic review

StudentsStudent numbers have increased by 10% froma total enrolment of 25,120 in 2008/09 to27,650 in 2009/10. This includes studentsbased at consortium colleges and otherpartner institutions.

Distribution of Higher Education students(2009/10)• 55% of the University’s students were female

in 2009/10.• Over 5,200 of the University’s students

studying in the UK originate from outside theUK.

• 97.6% of young full-time first degree entrantsin 2008/09 were from state schoolscompared to 88.5% for the sector as awhole.

• 40.4% of young full-time first degree entrantsin 2008/09 were from socio-economic groups4, 5, 6 or 7, compared to 32.2% for thesector as a whole.

• 89.9% of young full-time first degree entrantsfrom low participation neighbourhoodscontinue or qualify at the University,compared to a sector figure of 87.2%.

Destination of Leavers from Higher Education(2008/09 students surveyed in 2009/10)The Destination of Leavers from HigherEducation (DLHE) is an annual surveyreviewing destinations of students six monthsafter they have left Higher Education. Inresponding to the University’s new StrategicPlan we have changed how we report ourfigures. The data below highlights destinationsof leavers who completed their studies fromJanuary 2008 to July 2009. In this period 5,125graduates were surveyed with our highestresponse rate to date of 87%. Of theresponses received, a population of 2,890(home, first degree, full-time students ingraduate jobs) contributes to determining ourTimes graduate employment league tableposition. Even in a period of recession 90%of all graduates were either in work or study,which is better than the University’santicipated 17% unemployment rate for theyear. The next survey will commence inNovember 2010.

Destination of University of Hertfordshirestudents in 2008/09

Other highlights from this survey indicated that:• most of our graduates are opting to work in

the East, followed by London and the SouthEast. Popular overseas locations are:Australia, Canada, France, Germany and theRepublic of Ireland.

• 15% of graduates reported that they hadpreviously worked at the company that theyare now employed by.

Other - UH10.5

Other - Companies5.1

Exemplas21.5

Tuition fees -overseas 25.8

Residences16.7

Research11.1

Buscompanies

8.2

Health andother contractincome 18.1

HEFCErecurrent grants

53.1

Tuition fees -home & EU

52.4

Specialinitiatives

6.2

Otherfundingcouncilgrants

5.4

Other1%

Not availablefor employment

2%Assumed tobe employed

10%

Furtherstudy only

16%

Part-time work andfurther study

8%

Voluntary/unpaidwork only

1%

Full-time work(including

self-employment)48%

Part-timepaid work

only12%

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• 10% of graduates found their vacancy bylooking at the employers’ website and nearly9% had a personal contact or usednetworking to find their opportunity.

• the average salary band is similar to lastyear, between £20,000 and £24,999.

Research and knowledge transferIn the context of the prevailing nationaleconomic climate, it is pleasing to report anincrease in research income this year. It isnotable that European Union research awardsformed a significant proportion of our overallresearch grants awarded, rising from 16% to46% in one year. This figure was boosted withthe prestigious award of an individual grant of€823,150, the first made to the University bythe recently established European ResearchCouncil, funded under FrameworkProgramme 7.

The University's research achievementsattracted much attention nationally in 2009/10,including reference to its success rate of 33%for research grant applications to UK ResearchCouncils, the highest in the UK.

Demonstrating the impact of research isincreasingly a national imperative in order tojustify the value of public investment in UKresearch. It was pleasing therefore that theimpact of the University's research receivedrecognition in a Research Councils UKpublication outlining how UK research wasachieving investment through partnerships.One was a project monitoring airborneasbestos and the other a BBC TV programmebased on the online Old Bailey transcripts oftrials co-developed at the University. Thistheme of partnership and collaboration wasalso seen when unique probes attached tometeorological balloons developed to measuredesert dust were called on by the Met Office tomeasure levels of volcanic ash over the UKthat had caused the closure of UK air space atthe time.

Partnership and collaboration are keycomponents of Knowledge TransferPartnerships (KTPs) where we continue to lead

the region in having the highest number ofKTPs. One of these, a Knowledge TransferPartnership between the Business School andAbbey Steel Ltd, was awarded the highestpossible grade of ‘Outstanding’ by the KTPGrading Panel for excellence in achievingbusiness innovation, graduate careerdevelopment and enhancing teaching andresearch of the University. Another, withSecomak, developed a Total Drying solutionthat delivers an impressive 30% energy-savingefficiency and is 50% more efficient overallthan previous versions, giving the company amarket edge.

The University continues to invest in itsresearch infrastructure. In 2009/10 it used its£2.6 million Research Capital Investment Fundallocation from HEFCE to enhance its thrivingand active research environment. All threeResearch Institutes received money from thefund which was awarded through a biddingprocess. Examples of this investment include alaboratory suite upgrade, a new nuclearmagnetic resonance (NMR) spectrometer, anda public history/community heritage videobooth and multimedia kiosk to facilitate aninnovative methodology for capturing oralhistory narratives and enabling the presentationof public history and heritage research.

A further indication of the research qualitydelivered by the University is its entry in theShanghai Jiao Tong league table of the globaltop 500 universities for a second successiveyear. The University first gained entry in2008/09 and was the first post-1992 UKuniversity to obtain access to this world topuniversity list.

The University formally launched the nationalConcordat to support the Career Developmentof Researchers developed by the UK researchcommunity, with the publication of ValuingResearch Staff. This guide illustrates theUniversity’s commitment to the principles ofthe Concordat and support for the personal,professional and career development ofresearchers at the University.


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The individual contribution of a researcher washonoured by the Royal Society of Astronomywhen Professor James Hough, Director of theUniversity's Centre for Astronomy Researchwas awarded the Herschel Medal foroutstanding work in the area of observationalastrophysics in April 2010.

Section 3: Corporate responsibility

People and cultureThe People and Culture enabler underpins the2010/15 Strategic Plan. Key PerformanceIndicators have been developed focusing onthe professional development of staff, staffcosts as a percentage of total costs and thewellbeing of staff, and progress has beenmade in all three of these areas. We undertooka staff opinion survey in the spring of 2010, thefirst for five years, and the outcomes were veryencouraging. Of the 56% of staff whoresponded 76% said they had receivedtraining and development in the last year. Over80% of the respondents said that theUniversity was a good place to work and thattheir motivation at work was generally high.Most respondents were also generally awareof the facilities the University provides tosupport their spiritual, emotional, physical andmental wellbeing. These are facilities such asthe Sports Village, the multi-faith Key Centre,counselling, a nursery and the mental healthadvisor. In national benchmarking our staffcosts as a percentage of total costs were 1%lower than at other Higher Educationinstitutions.

A major focus during 2009/10 has been theimplementation of a new HR and Payrollmanagement information system (MIS). Thefirst phase has now gone live with everyemployee in the University having a personalportal which gives access to their personaldata and the ability to directly update elementsof the information held. The new MIS alsoenables the automatic inputting of timesheets,online authorisation of recruitment as well asallowing managers to access data relating totheir teams. Further modules are due for rollout by July 2011.

Our development team ran over 235 events in2009/10. The team also oversaw thecompletion of Professional CareerAdministrator scheme – with all four graduatelevel administrators being employed. The teamhave also worked very closely with theresearch staff across the University and theConcordat action group. This resulted insupporting the researchers’ conference andongoing collaborative work in developing animproved working experience for researchstaff.

In 2009/10 we rolled out 360 degreeleadership feedback for all the seniormanagers and Heads of School. This processwas supported by one-to-one coaching andhas resulted in new approaches to leadingteams and solving problems. Some of themanagers involved have gone on to use thepersonal coach for other interventions intheir areas.

A single Joint Negotiating ConsultativeCommittee approach was agreed by theRecognised Trades Unions (RTUs) and beganin January 2010. It has allowed greater co-ordination of issues and less duplicationacross the two RTUs. A very successfulworkshop was facilitated between the RTUsand Heads of School to look at workloadmodelling.

Equality and diversityThe University promotes an inclusive ethos offairness, courtesy and respect whichencourages differences to be shared, exploredand celebrated. This commitment to promotingequality and valuing diversity, which informs allpolicies, procedures and activities, is madeknown to governors, students and staff,applicants and visitors. The University providesdevelopment opportunities on equality forgovernors, staff and students.

As part of meeting its positive legal duties topromote race, disability and gender equality,the University reviewed and revised the RaceEquality Policy, Disability Equality Scheme andGender Equality Scheme. The reviews used

the outcomes of monitoring, equality impactassessments and consultations to determineequality objectives. The Board of Governorsapproved these and the revised Policy topromote dignity and respect: preventing anddealing with harassment and bullying. Equalitypolicies and the annual reports of progressagainst equality action plans can be found atgo.herts.ac.uk/equality

Heads of Strategic Business Units (SBUs)reported in the business planning process howequality is integral to each SBU and outlinedtheir equality goals for 2010/11. Heads willreport next year on the progress made againstthese goals.

The University's formal project on equalityimpact assessments ended in February 2010.The internal audit of equality, which gave asubstantial level of assurance to the adequacyand effectiveness of the other controls in placefor equality, made two recommendations inrespect of equality impact assessments. First,to ensure the process of conducting equalityimpact assessments continues; secondly arecommendation to ensure that assessingequality impact becomes integral to thedevelopment and consideration of proposalsfor strategic, policy and service developments.

Through restructuring, the equality function isnow part of the Office of the Vice-Chancellor,whilst disability services for staff and studentsremain in the Dean of Students Office.

Through the Higher Education Academy/Equality Challenge Unit’s Summit Program,changes were made at University level, and inthe Business School, to address differences indegree attainment between students ofdifferent ethnic groups. Although the Programhas concluded, the search and use ofsuccessful interventions continues.

The University continued working withHertfordshire County Council, Welwyn HatfieldBorough Council, Herts Equality Council andthe Hertfordshire Partnership NHS Foundation

Trust, as well as with voluntary groups such asthe Welwyn Hatfield Ethnic Minority Group, topromote equality and to encourage goodcommunity relations.

Health and safetyThe University’s Occupational Health andSafety Director reports annually to the Student,Employment and Quality Committee. Thisreport provides assurances to the Board on itscommitment to provide a safe workingenvironment for staff, students and visitors tothe University. This is through reporting on keyindicators to demonstrate effective riskmanagement processes are in place. This isreflected in the University accident statisticswhich still remain below the sector norm forHigher Education. The University has beenvery proactive in monitoring with managersover this year, to integrate safety into locallevel reporting processes. There has also beena focus given to training, and ongoingdevelopment of competence of our staff insafety management. This has beendemonstrated in the increase in numbers ofsafety courses offered and attended by staffbut also offers staff the opportunity to gain arecognised safety qualification accredited bythe Institute of Occupational Health and Safety(Europe’s largest safety professional body).The University continues to work actively withthe sector safety association to share andlearn from best practice.

The University has continued to providewellbeing services, which include regularNational Blood Service donation sessionstwice a year, well being activities focussing ona week-long programme of activities in Apriland also this year, two new services have beenoffered: onsite seasonal flu vaccinations andan onsite Occupational Physiotherapist. Allservices are well received and valued by staffand students.

Consultation with staff and students wasavailable through the University’s Health andSafety Consultative Committee which enablesan opportunity for staff to discuss and becomeinvolved in safety at the University.


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Sustainability and environmentThe University’s environment team is activelyworking to make the University of Hertfordshirea more sustainable place to work and study,now driven by new targets in the 2010/15Strategic Plan. The KPIs are Carbon Footprint(tonnes CO2 pa) table position and the People& Planet Green League, and a range of policyand performance indicators. In 2010, theUniversity was awarded third place nationallyin the People & Planet Green League, scoringvery well for policy, waste management andtransport, but less well for energy and water.The CO2 figure is directly related to energy,and is particularly sensitive as we enter theCRC energy efficiency scheme this year. Wehave major challenges ahead to reduce ourenergy consumption.

To support the Strategic Plan, a newInfrastructure and Sustainability Group meetsto develop tactical approaches, and monitorand balance progress in Estates, InformationHertfordshire, the Environment Team andProcurement. A communications strategy is akey part of that group's work. The University ofHertfordshire achieved silver ranking in theUniversities that Count Environment Index: astandard for benchmarking environmentalresponsibility in Higher Education Institutions(HEIs). The index is based on the Business inthe Community Corporate Responsibility Indexand therefore also allows comparisons with thebusiness sector. The University scored abovethe HEI and business sector average.

CommunityThe University, as a major public sector body,has a responsibility to promote economic,cultural and social prosperity within itscommunity and has therefore developed a newCommunity Engagement Strategy to guide itswork in this field.

Through its Social Enterprise Unit, studentsand staff of the University provide valuablesupport to the Third Sector. The Unit helps toaddress local third sector organisations’strategic issues as well as their practicaldifficulties, offering expertise in various

disciplines including: strategy, marketing, HR,IT, accounting, finance and management.Local schools and colleges draw on theUniversity’s UK Recruitment and Access teamfor a wide range of activities designed tomotivate and raise the aspirations of theirstudents. These activities include: mentoring,workshops, coaching, staff development forteachers, masterclasses, access to specialistUniversity facilities, and project work for‘Gifted and Talented’ students. At the sametime, the University continues to develop itspartnerships with schools and collegesthrough the Academy Schools and TrustSchools programmes. Schools also benefitfrom our School Governors programme, whichencourages staff to become school governorswithin Hertfordshire.

Particular emphasis is placed on supportingthe local community, especially in Hatfield,through volunteering by students and staff,fundraising and charitable giving linked to localcharities, and heritage projects related to thelocal community. A good example is thecontinuing support for community charitiesgiven by the Student Union’s annual RAGcampaign.

The University’s Community PartnershipsOffice plays an important role in establishingand maintaining good relations with the localcommunity, and its work has been enhancedthrough the establishment of a helpline for thelocal community and targeted financial supportfor the Borough Council.

By using UHArts to organise music, theatre,cinema, art, literature and other cultural eventsopen to the public, and by makingperformance venues available to selected localgroups, the University makes a substantialcontribution to the cultural life of its localcommunity. Similarly, through the SportsVillage and specialist academic staff andstudents, the University plays an important rolein wellbeing and in the sporting life of its localcommunity. It organises sporting events opento the public, provides coaching and specialist


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sports expertise for local sportspeople andteams, makes sports facilities available to localgroups (especially schools), and works closelywith local sports organisations, includingcouncils and other service providers.

The University’s academic staff are keen tocommunicate their expertise to the public. Theyprovide public lectures across a broad range ofacademic areas, and lead debate on topics ofpublic interest.

As a major employer and principal provider ofhigher education in the county the University isclosely engaged in local strategic decision-making. In addition to representation on keylocal and regional bodies, the University hasestablished formal strategic partnerships withthe County Council, St Albans District Council,and the Hertfordshire Further EducationColleges, and makes a major contribution tothe county’s work on sustainability, theOlympics, and economic strategy.

Section 4: FinancialThe current economic climate and the UKgovernment's comprehensive spending reviewpose a significant financial risk to manybusinesses and universities. The Universitymanages its investment portfolio and cashreserves in such a way as to mitigate this riskas far as possible through prioritisingexpenditure and through a revised investmentpolicy. Recent increases in stock markets and arevision to assumptions governing liabilitieshave reduced the pension scheme deficits,though such deficits remain outside of theUniversity’s immediate control. The identifiablevalue of the pension scheme liability at31 July 2010 amounted to £23.3 millioncompared to £62.9 million at 31 July 2009.

The financial statementsThe financial statements presented by theBoard comprise the consolidated results of theUniversity and its subsidiary companies,associates and joint ventures (the Group). TheGroup companies undertake activities which,for legal or commercial reasons, are more

appropriately channelled through a limitedcompany. These subsidiaries and their activitiesare listed in note 13. Where possible the whollyowned subsidiary companies pay their taxableprofits to the University under the Gift Aidscheme.

Results for the yearThe consolidated results for the University andits subsidiary companies for the year to 31 July2010 are summarised in the following table:

The Board is pleased to report that the Groupachieved a surplus before taxation of £2.8million and a substantial improvement in itscash position to £29.3 million. The University’stotal income, including the share of incomefrom joint ventures, has increased by 12.0%over the previous year to £263.2 million.Growth in research activities continues withincome rising from £9.6 million to £11.1 million

2010 2010 2009 2009£’000 £’000 £’000 £’000(after (before (after (before

FRS 17) FRS 17) FRS 17) FRS 17)

Income 262,845 262,845 235,141 235,141

Less: share of incomefrom joint ventures (28,219) (28,219) (24,802) (24,802)

Expenditure (232,097) (229,262) (208,891) (208,512)_______ _______ _______ _______

Surplus on continuingoperations 2,529 5,364 1,448 1,827

Share of operatingprofit in joint ventures 288 288 372 372

Surplus on sale of fixed assets 35 35 528 528_______ _______ _______ _______

Surplus beforerestructuring and taxation 2,852 5,687 2,348 2,727

Exceptionalrestructuring costs - - (3,533) (3,533)

Taxation (141) (141) (23) (23)______ ______ ______ ______

Surplus/(deficit) for the year 2,711 5,546 (1,208) (829)______ ______ ______ ______


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(15.6%). This significant rise is mainly due toan increase in research income from theEuropean Commission and in addition reflectsour success in our research applicationconversion rate. The increase in the number ofundergraduate students paying the variabletuition fee and a stabilisation of overseasstudent numbers are reflected in an overallincrease of tuition fees and education contractincome of 22.9% to £96.3 million. Otherincome has increased significantly during theyear from £80.1 million to £90.5 million and isprimarily due to the growth in commercialactivity within the subsidiary companies.

Total expenditure increased over the previousyear due to the substantial increase incommercial activity income and studentnumbers, in addition to increased debt serviceand depreciation costs following thecompletion of The Forum. Following therestructuring exercises undertaken in 2009,staff costs fell by 2.5% compared with theprevious year.

Capital projectsDuring the year the University group invested£20 million in major capital projects. £16million of this was spent on projects across theUniversity’s estate to upgrade and improve thecondition of facilities across both campuses.£4 million was invested in major MIS changesin finance, HR, academic registry and studentfinance; whilst the finance and HR changeswere largely completed at the year end,elements of these projects and the newstudent system project will continuethroughout 2010/11. The construction of TheForum building was completed on the CollegeLane Campus during 2009 and was ready forthe start of the 2009/10 academic year; theproject was completed within budget. TheUniversity secured a loan facility of £40 millionto fund the entire project, which encompassesthe redevelopment of the main student socialand commercial centre. Refurbishment of theolder facilities on the College Lane Campushas continued throughout the year althoughcapital expenditure will need to be prioritised

in accordance with trading conditions and theavailability of grants following the review ofgovernment expenditure. Work started during2009/10 on a new Law Court building on thede Havilland Campus, and this is due to openfor students in September 2011; this schemehas been partly funded by HEFCE, but alsofrom operating cash flow and from theanticipated sale of the current facility in StAlbans. The Group's bus company refinancedover forty vehicles during the year, raisingalmost £3 million in cash.

Private Finance InitiativeThe University Group has, under the terms ofthe agreement with Ellenbrook, permanent useof 1,600 student residences at the deHavilland Campus. This development has beenprovided by the private sector through aPrivate Finance Initiative for which theUniversity pays an annual unitary charge forfacilities management over the next twenty-three years. At the end of this period (2032/33)ownership of the residences will revert to theUniversity.

Investment policy and performanceThe investment policy of the Universityprovides that deposits are only made toborrowers domiciled in major Europeancountries with high investment grade status.The deposit limits are generally £5 million withany one financial institution and these limitsare reduced for lower rated institutions.

Cash flowThe notes to the consolidated cash flowstatement show there was an increase in cashand short term deposits during the year of £22million to £30 million.

Section 5: Corporate governanceIn accordance with the University’s Articles ofGovernment, the Board of Governors isresponsible for the administration andmanagement of the University’s affairs,including ensuring an effective system ofinternal control, and is required to presentaudited financial statements for each financial

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year. The Board of Governors is responsiblefor keeping proper accounting records, whichdisclose with reasonable accuracy at any timethe financial position of the Group, and forensuring that the financial statements areprepared in accordance with the Instrumentand Articles of Government, the Statement ofRecommended Practice: Accounting forFurther and Higher Education and otherrelevant accounting standards. In addition,within the terms and conditions of a FinancialMemorandum agreed between the HigherEducation Funding Council for England(HEFCE) and the Board of Governors of theUniversity of Hertfordshire, the Board ofGovernors, through its designated accountableofficer, is required to prepare financialstatements for each financial year which give atrue and fair view of the state of affairs of theUniversity of Hertfordshire and Group and ofthe surplus or deficit and cash flows for thatyear. In preparing those financial statements,the Board of Governors is required to:

• select suitable accounting policies and thenapply them consistently.

• make judgements and estimates that arereasonable and prudent and state whetherapplicable United Kingdom AccountingStandards have been followed, subject toany material departures disclosed andexplained in the financial statements.

• prepare the financial statements on thegoing concern basis unless it isinappropriate to presume that the Group willcontinue in operation.

The Board of Governors has taken reasonablesteps to:

• ensure that funds from HEFCE are used onlyfor the purposes for which they have beengiven and in accordance with the FinancialMemorandum with the Funding Council andany other conditions which the FundingCouncil may from time to time prescribe.

• ensure that there are appropriate financialand management controls in place tosafeguard public funds from other sources.

• safeguard the assets of the Group and

prevent and detect fraud and otherirregularities.

• secure the economical, efficient and effectivemanagement of the University’s resourcesand expenditure.

In so far as each of the governors is aware:

• there is no relevant audit information ofwhich the University’s auditors are unaware;and

• the governors have taken all steps that theyought to have taken to make themselvesaware of any relevant audit information andto establish that the auditors are aware ofthat information.

The University endeavours to conduct itsbusiness in accordance with the sevenPrinciples identified by the Committee onStandards in Public Life and with the guidanceto institutions of higher education provided bythe Committee of University Chairmen (CUC).The Board is satisfied that it is in compliancewith the revised ‘Guide for Members of HigherEducation Governing Bodies in the UK’published by the CUC in November 2004. TheUniversity maintains a Register of Interests ofmembers of the Board of Governors and ofmembers of the Office of the Vice-Chancellor,which may be consulted by arrangement withthe Secretary and Registrar. Also at thebeginning of each meeting of the Board and itscommittees an item headed ‘Declaration’allows for those attendees to make known anyconflicts or associations with the mattersunder consideration.

The University is an independent corporation,established as a Higher Education Corporationunder the provisions of the Education ReformAct 1988 and the Further and HigherEducation Act 1992, and is charity exemptfrom registration. Its objects, powers andframework of governance are set in theArticles of Government, which were approvedin 1989 by the Secretary of State forEducation. The current version of the Articleswas approved by the Privy Council in 1993.The Articles require the University to constitute

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a Board of Governors and an Academic Board,each with clearly defined functions andresponsibilities, to oversee and manage itsactivities.

The Board of Governors is the executivegoverning body, responsible for the finance,property and staffing of the University. It isspecifically required to determine theeducational character and mission of theUniversity and to set its general strategicdirection. The Board has a majority ofindependent members, chosen in line withstrict criteria contained in the legislation. It iscustomary for the Chairman of the Board to beelected from the independent members. Thereis also provision for the appointment of co-opted members, some of whom may bemembers of the staff of the University, and forrepresentatives of the Academic Board and ofthe student body. No members of the Board,apart from staff members, will receive anyreimbursement for the work they do for theBoard. The full list of the Board of Governors isshown on page 63.

Subject to the overall responsibility of theBoard of Governors, the Academic Board hasoversight of the academic affairs of theUniversity and draws its membership entirelyfrom the staff and students of the University. Itis particularly concerned with general issuesrelating to the teaching and research work ofthe University. The Vice-Chancellor, as ChiefExecutive Officer, is the head of the Universityand has a general responsibility to the Boardof Governors for the organisation, directionand management of the University. Under theterms of the formal Financial Memorandumbetween the University and HEFCE, the Vice-Chancellor is the designated accountableofficer of the University and in that capacitycan be summoned to appear before the PublicAccounts Committee of the House ofCommons.

The Board of Governors met eight timesduring the academic year, and averageattendance at ordinary meetings was

approximately 88%. Whilst certain matterssuch as approval of the strategic plan, theannual budget, major investments and the saleand purchase of land, are reserved matters forthe Board, much of its detailed work ishandled initially by committee, in particular theFinance and General Purposes Committee,Student, Employment and Quality Committee,Nominations Committee (the Vice-Chancelloris a member of these Committees) and theAudit and Remuneration Committees. Otherthan the Development and Audit Committees,whose compositions include a staff governornominated by the Board of Governors, thememberships of these committees arecomposed of independent and co-optedexternal members of the Board. The decisionsof all of these committees are reportedformally to the Board. In addition, thesecommittees may establish sub-committeesand groups.

The Board of Governors conducts regulareffectiveness reviews of itself and itscommittees. These reviews include an analysisof attendance, the work undertaken and theviews of members so that changes can beintroduced as appropriate during the nextcycle. As Chief Executive, the Vice-Chancellorexercises considerable influence upon thedevelopment of University strategy, theidentification and planning of newdevelopments and the shaping of theUniversity ethos. Members of the Office of theVice-Chancellor, currently the Deputy Vice-Chancellor, the Group Finance Director and theSecretary and Registrar, all contribute invarious ways to this aspect of the work but theultimate responsibility to the Board rests withthe Vice-Chancellor.

In accordance with the Articles of Governmentof the University, the University Secretary andRegistrar has been designated Secretary tothe Board and in that capacity providesindependent advice on matters of governanceto all Board members.

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The Board of Governors is satisfied that theUniversity has adequate resources to continuein operation for the foreseeable future; for thisreason, the going concern basis continues tobe adopted in the preparation of the financialstatements.

It acknowledges its responsibility for ensuringthat an effective system of internal financialcontrol is maintained and operated by theUniversity of Hertfordshire. The system canprovide only reasonable and not absoluteassurance that assets are safeguarded,transactions authorised and properly recorded,and that material errors or irregularities areeither prevented or would be detected within atimely period. The system of internal financialcontrol is based on a framework of regularmanagement information, administrativeprocedures including the segregation of duties,and a system of delegation and accountability.In particular, it includes:

• comprehensive budgeting systems with anannual budget which is reviewed and agreedby the Board of Governors.

• regular reviews by the Board of Governors ofperiodic and annual financial reports whichindicate financial performance againstbudgets and forecasts.

• setting targets to measure financial and otherperformance using KPI’s as appropriate

• clearly defined capital investment controlguidelines.

• the adoption of formal project managementdisciplines where appropriate.

The Board of Governors has established theprocesses to comply with the revised directionfrom HEFCE for the identification, evaluationand management of risks the University faces.The following is a statement of the University’sinternal control and risk management policy:

• As the Board of Governors of the Universityof Hertfordshire, we have responsibility formaintaining a sound system of internalcontrol that supports the achievement ofpolicies, aims and objectives, while

safeguarding the public and other funds andassets for which we are responsible, inaccordance with the responsibilitiesassigned to the governing body in thecharter and statutes/instrument and articlesand the Financial Memorandum with HEFCE.

• The system of internal control is designed tomanage rather than eliminate the risk offailure to achieve policies, aims andobjectives; it can therefore only providereasonable and not absolute assurance ofeffectiveness.

• The system of internal control is based on anongoing process designed to identify theprincipal risks to the achievement of policies,aims and objectives, to evaluate the natureand extent of those risks and to managethem efficiently, effectively and economically.This process has been formally documentedduring the year to the extent that theUniversity considers that it has embracedthe broad principles of British UniversitiesFinance Directors Group (BUFDG) guidanceon ‘Corporate Governance for HigherEducation’ and has in place comprehensiverisk management policies and procedures asat 31 July 2010 and up to the date ofapproval of the financial statements, andaccords with HEFCE guidance.

As the Board of Governors, we haveresponsibility for reviewing the effectiveness ofthe system of internal control. The followingprocesses have been established:

• We have met at regular intervals to considerperformance reports, operational plans andthe strategic direction of the University.

• We receive periodic reports from theChairman of the Audit Committeeconcerning internal control, and we requireregular reports from managers on the stepsthey are taking to manage risks in their areasof responsibility, including progress reportson key projects.


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• The Audit Committee provides an oversightof risk management.

• The Audit Committee receives regularreports from the internal audit service, whichincludes the internal audit service’sindependent opinion on the adequacy andeffectiveness of the institution’s system ofinternal control, together withrecommendations for improvement.

• A programme of risk awareness training hasbeen completed. All new managers willreceive training in risk management as partof the New Managers programme and CoreSkills. This will be one of the mandatoryaspects within our ManagementDevelopment Strategy.

• A system of key performance and riskindicators has been developed.

• A robust risk prioritisation methodologybased on risk ranking and cost-benefitanalysis has been established.

• An organisation-wide risk register ismaintained.

• Reports are received from budget holders,department heads and project managers oninternal control activities.

Our review of the effectiveness of the systemof internal control is informed by the work ofthe internal audit service, which operates tostandards defined in the HEFCE Audit Code ofPractice and which was last reviewed foreffectiveness by the HEFCE Audit Service inMarch 2005. The HEFCE Audit Service visitedagain in February 2006 to carry out ‘Evaluationof Risk Management, Control, and GovernanceArrangements’. The overall conclusion of theAudit Service report was that the Universityachieved a ‘high level of assurance’.

Our review of the effectiveness of the systemof internal control is also informed by the workof the Office of the Vice-Chancellor within theinstitution, which has responsibility for thedevelopment and maintenance of the internalcontrol framework, and by comments made bythe external auditors in their managementletter and other reports.

The Audit Committee oversees the work of theinternal audit service. The work of the internalaudit service is informed by an analysis of therisks to which the University is exposed, andannual internal audit plans are based on thisanalysis. The Board of Governors endorses theanalysis of risks and the internal audit plans onthe recommendations of the Audit Committee.The head of internal audit provides the AuditCommittee with an annual report on internalaudit activity in the University and is requiredto provide the Board and the Vice- Chancellorwith an opinion on the adequacy andeffectiveness of the University’s riskmanagement, control and governanceprocesses. A full discussion on the riskmanagement effectiveness takes place withinthe Audit Committee with questioning bymembers of the head of internal audit andofficers in attendance. Within this context thehead of internal audit, based upon the workundertaken for the twelve months ended 31July 2010, gave the opinion that the Universityhas adequate and effective risk management,governance and control processes to managethe achievement of the organisation’sobjectives.

The University has demonstrated that it hasproper arrangements in place to promoteeconomy, efficiency and effectiveness, anda value for money programme has beenapproved.

As of 1 August 2008, the University opted todevelop its own internal audit department inplace of that previously contracted out to a

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third party provider, with a view to furtherincreasing the added value that thedepartment can offer across the University.The Audit Committee has reported to theBoard of Governors that it is satisfied withthese arrangements.

During 2009/10 discussions took place overthe establishment of a joint internal auditservice between the University of Hertfordshireand the University of Bedfordshire. With theagreement of both universities this new servicewas established on 1 September 2010.

Public BenefitThe University performs its responsibilities asset out in legislation to carry out teaching andresearch and in relation to this the Universityhas had regard to the Charity Commissioner’sGuidance on Public Benefit. The Universityadmits students to its full-time undergraduateprogramme on the basis of merit and potentialto benefit, and has in place an agreement withthe Office for Fair Access (OFFA) todemonstrate that access should not be limitedon the grounds of individual financialcircumstances. The University engagesenthusiastically in a wide range of activities tonot only advance education but to the benefitof its wider communities.

Charitable TrustOn 21 October 2009 the University becamethe sole trustee of the University ofHertfordshire Charitable Trust whose objectsare to support the advancement of teachingand research and students at the University.

Returns to HEFCE and HESA (HigherEducation Statistics Agency)As part of the annual accountability return inAutumn 2009 between the University and thefunding council the Chairman of the AuditCommittee was required to complete and signvarious documents before submission. Thisengendered a lively debate within the AuditCommittee as to whether the committee wasassuring the process or was giving substantialassurance on the data contained within theindividual returns. Discussion with the fundingcouncil took place over 2009/10 whoconfirmed that they sought assurance on theprocess. The Audit Committee can give fullassurance on the processes associated withthese returns submitted during 2009/10 andthis assurance is also confirmed in the AnnualReport of the Audit Committee to the Board ofGovernors for 2009/10.

AuditorsA resolution to reappoint Grant Thornton UKLLP as auditors of the University for thispurpose will be proposed at the meeting of theAudit Committee of the Board of Governors.

By Order of the Board

P E WatersSecretary

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Report of the independent auditors to the Boardof Governors of the University of Hertfordshire

We have audited the Group and Universityfinancial statements (the ‘financialstatements’) of University of Hertfordshire forthe year ended 31 July 2010 which comprisethe Group income and expenditure account,the Group statement of historical costsurpluses and deficits, the Group statementof total recognised gains and losses, thereconciliation of group reserves andendowments, the Group and Universitybalance sheets, the Group cash flowstatement and the related notes. Thesefinancial statements have been preparedunder the accounting policies set out therein.

This report is made solely to the governingbody, in accordance with the University'sinstrument and articles of government andsection 124B of the Education Reform Act1988. Our audit work has been undertaken sothat we might state to the governing bodythose matters we are required to state to it inan auditor’s report and for no other purpose.To the fullest extent permitted by law, we donot accept or assume responsibility toanyone other than the board of governors forour audit work, for this report, or for theopinions we have formed.

Respective responsibilities of the University’sboard of governors and auditorsThe governing body’s responsibilities forpreparing the annual report of the board ofgovernors and the Group financial statementsin accordance with the Accounts Directionissued by the Higher Education FundingCouncil for England, the 2007 Statement ofRecommended Practice: Accounting forFurther and Higher Education, applicable lawand UK Accounting Standards (UK GenerallyAccepted Accounting Practice) are set out inthe Statement of Responsibilities on page 19.

Our responsibility is to audit the financialstatements in accordance with relevant legaland regulatory requirements and theInternational Standards on Auditing (UK andIreland). We report to you our opinion as towhether the financial statements give a true

and fair view and are properly prepared inaccordance with the Accounts Direction andthe 2007 Statement of RecommendedPractice: Accounting for Further and HigherEducation.

We also report to you whether income fromfunding councils, grants and income forspecific purposes and from other restrictedfunds administered by the University havebeen properly applied only for the purposesfor which they were received. In addition, wereport to you whether, in all material respects,income has been applied in accordance withthe statutes and, where appropriate, thefinancial memorandum with the HigherEducation Funding Council for England ('theFunding Council'), the Training andDevelopment Agency for Schools and theLearning and Skills Council.

We also report to you our opinion as towhether the information given in the annualreport of the board of governors is notconsistent with the financial statements.

In addition we also report to you if, in ouropinion, the University has not kept properaccounting records, if the University'sfinancial statements are not in agreementwith the accounting records and returns, or ifwe have not received all the information andexplanations we require for our audit.

We read the annual report of the board ofgovernors and the Corporate GovernanceStatement and consider the implications forour report if we become aware of anyapparent misstatements within them ormaterial inconsistencies with the financialstatements. We are not required to considerwhether the statement of internal control(included as part of the CorporateGovernance Statement) covers all risks andcontrols, or to form an opinion on theeffectiveness of the institution’s corporategovernance procedures or its risk and controlprocedures.

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Basis of opinionWe have conducted our audit in accordancewith the International Standards on Auditing(UK and Ireland) issued by the AuditingPractices Board, and the Audit Code ofPractice issued by the Higher EducationFunding Council for England. An auditincludes examination, on a test basis, ofevidence relevant to the amounts anddisclosures in the financial statements. It alsoincludes an assessment of the significantestimates and judgements made by thegoverning body in preparing the financialstatements and whether the accountingpolicies are appropriate to the Group andUniversity’s circumstances, consistentlyapplied and adequately disclosed.

We planned and have performed our audit soas to obtain all the information andexplanations we considered necessary toprovide us with sufficient evidence to givereasonable assurance that the financialstatements are free from materialmisstatement, whether caused by fraud orother irregularity or error. In forming ouropinion we have also evaluated the overalladequacy of the presentation of informationin the financial statements.

OpinionIn our opinion:

• the financial statements give a true and fairview, in accordance with UK GenerallyAccepted Accounting Practice, of the stateof affairs of the Group as at 31 July 2010and of the University’s and Group’s surplusof income over expenditure for the yearthen ended;

• the financial statements have been properlyprepared in accordance with the AccountsDirection and the 2007 Statement ofRecommended Practice: Accounting forFurther and Higher Education.

• in all material respects, income from theFunding Council, the Training andDevelopment Agency for Schools and theLearning and Skills Council, grants andincome for specific purposes and fromother restricted funds administered by theUniversity during the year ended 31 July2010 have been applied for the purposesfor which they were received

• in all material respects, income during theyear ended 31 July 2010 has been appliedin accordance with the University’s statutesand, where appropriate, with the financialmemorandum with the Funding Council, thefunding agreement with the Training andDevelopment Agency for Schools and thefunding agreement with the Learning andSkills Council.

GRANT THORNTON UK LLPRegistered AuditorChartered AccountantsMilton KeynesDate:

Report of the independent auditors to the Boardof Governors of the University of Hertfordshire

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Consolidated income and expenditure accountYear ended 31 July 2010

2010 2009Notes £’000 £’000

IncomeFunding council grants 1 64,621 66,483Tuition fees and education contracts 2 96,305 78,387Research grants and contracts 3 11,124 9,610Other operating income 4 90,535 80,154Endowment and investment income 5 260 507______ ______

262,845 235,141

Less: share of income from joint ventures (28,219) (24,802)_______ _______

Total income 234,626 210,339_______ _______

ExpenditureStaff costs 6 112,877 112,213Other operating expenses 8 100,651 82,793Depreciation 8 12,447 10,467Interest and other finance costs 10 6,122 3,418_______ _______

Total expenditure 8 232,097 208,891

Surplus after depreciation of tangible fixed assetsat valuation and before taxation 2,529 1,448

Share of operating profit in joint ventures 288 372

Exceptional item: continuing operationsSurplus on disposal of fixed assets 35 528_______ ______

Surplus after depreciation of tangible fixed assets at valuation,disposal of fixed assets and before restructuring costs and taxation 2,852 2,348

Exceptional item: restructuring costs 6 - (3,533)_______ ______

Surplus/(deficit) after depreciation of tangible fixed assets at valuation,disposal of fixed assets, restructuring costs and before taxation 2,852 (1,185)

Taxation 9 (141) (23)_______ ______

Surplus/(deficit) after depreciation of tangible fixed assets at valuation,disposal of fixed assets, restructuring costs and taxation 2,711 (1,208)

Surplus/(deficit) for the year transferred to accumulated income in endowment funds (5) 74_______ ______

Surplus/(deficit) for the year retained within general reserves 2,706 (1,134)_______ ______

All results are from continuing operations.

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Financial statements

Statement of group historical cost surpluses and deficits2010 2009

Notes £’000 £’000

Surplus/(deficit) after depreciation of assets at valuation and taxation 2,711 (1,208)

Difference between historical cost depreciation charge andactual charge on revalued amount of fixed assets 25 786 774_______ ______

Historical cost surplus/(deficit) for the year after taxation 3,497 (434)_______ ______

Statement of group total recognised gains and losses2010 2009£’000 £’000

Surplus/(deficit) after depreciation of tangible fixed assets at valuation, disposal 2,423 (1,580)of fixed assets, restructuring costs and taxation before share of operatingprofit in joint ventures

Share of operating profit in joint ventures 288 372Appreciation/(depreciation) of endowment asset investments 24 146 (138)Net endowments 24 75 205Actuarial gain/(loss) relating to pension scheme 32 34,289 (30,562)Past service gain relating to pension scheme 8,066 -_______ _______

Total recognised gains/(losses) for the year 45,287 (31,703)_______Prior year adjustment (11,974)_______

Total recognised gains since last report 33,313_______

Reconciliation of group reserves and endowments2010 2009£’000 £’000

Opening reserves and endowments as previously stated 108,269Prior year adjustment 35 (11,974)_______

Opening reserves and endowments restated 64,592 96,295

Total recognised gains/(losses) for the year 45,287 (31,703)_______ _______

Closing reserves and endowments 109,879 64,592_______ _______

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Balance sheets as at 31 July 2010

2010 2010 2009 2009Group University Group University

RESTATED RESTATEDNotes £’000 £’000 £’000 £’000

Fixed assets

Goodwill 14 1,566 - 1,655 -Tangible assets 12 267,011 198,044 260,106 192,838Investments 13 1,545 69,119 1,604 69,119Investment in joint ventures:

Share of gross assets 4,302 - 7,183 -Share of gross liabilities (3,595) - (6,768) -_______ _______ _______ _______

270,829 267,163 263,780 261,957

Endowment asset investments 15 2,397 602 2,171 592

Current assets

Stock and work in progress 16 260 114 214 83Debtors - within one year 17 25,531 29,069 26,220 22,398

- more than one year 17 - 1,311 - 3,599Short term deposits 7,951 7,951 1,876 306Cash at bank and in hand 21,372 11,855 4,708 1,176_______ _______ _______ _______

55,114 50,300 33,018 27,562

Creditors: amounts falling duewithin one year 19 (61,353) (57,736) (70,715) (70,360)_______ _______ _______ _______

Net current liabilities (6,239) (7,436) (37,697) (42,798)_______ _______ _______ _______

Total assets less current liabilities 266,987 260,329 228,254 219,751

Creditors: amounts falling due aftermore than one year 20 (84,598) (72,945) (55,942) (41,809)

Provisions for liabilities 22 (2,132) (1,154) (2,035) (765)

Pension scheme liability 32 (23,373) (24,317) (62,893) (60,734)_______ ________ _______ _______

Total net assets 156,884 161,913 107,384 116,443_______ _______ _______ _______

29

Balance sheets as at 31 July 2010


RESTATED RESTATEDNotes £’000 £’000 £’000 £’000

Deferred capital grants 23 47,005 47,270 42,792 42,792_______ _______ _______ _______

Endowment fundsExpendable - - - -Permanent 2,397 602 2,171 592_______ _______ _______ _______

24 2,397 602 2,171 592_______ _______ _______ _______ReservesIncome and expenditure accountexcluding pension reserve 25 107,320 115,963 100,993 110,612Pension reserve 25 (23,373) (24,317) (62,893) (60,734)_______ _______ _______ _______

Income and expenditure reserve 83,947 91,646 38,100 49,878including pension reserve _______ _______ _______ _______

Revaluation reserve 25 23,535 22,395 24,321 23,181_______ _______ _______ _______

Total endowment funds and reserves 109,879 114,643 64,592 73,651_______ _______ _______ _______

Total funds 156,884 161,913 107,384 116,443_______ _______ _______ _______

The Financial Statements on pages 26 to 62 were approved by the Board of Governors on 23 November 2010and signed on their behalf by:

Mrs J L Connell Professor R J T Wilson Mr A MoffatChairman Vice-Chancellor Group Finance Director

30

Consolidated cash flow statementYear ended 31 July 2010

2010 2009Notes £’000 £’000

Net cash inflow from operating activities 26 28,701 6,027

Return on investments and servicing of finance 27 (2,061) (2,423)

Taxation – UK corporation tax received/(paid) 81 (118)

Capital expenditure and financial investment 28 (13,737) (38,848)_______ _______

Cash inflow/(outflow) before use of liquid resources and financing 12,984 (35,362)

Management of liquid resources 29 (6,075) (698)

Financing 30 8,518 35,283_______ _______

Increase/(decrease) in cash for the period 15,427 (777)_______ _______

Reconciliation of net cash flow to movement in net debt

2010 2009£’000 £’000

Increase/(decrease) in cash for the period 15,427 (777)

Cash used to increase liquid resources 29 6,075 698

New loans (8,518) (35,283)_______ _______

Change in net debt 31 12,984 (35,362)

Opening net debt at 1 August 31 (68,942) (33,580)_______ _______

Closing net debt at 31 July 31 (55,958) (68,942)_______ _______

31

Statement of principal accounting policies

Basis of preparationThese financial statements have beenprepared in accordance with the Statement ofRecommended Practice (SORP): Accountingfor Further and Higher Education 2007 and inaccordance with applicable AccountingStandards.

The accounting policies are unchangedcompared with the prior year and have beenapplied consistently in dealing with itemsconsidered material in the financial statements.

Basis of accountingThe financial statements have been preparedunder the historical cost convention, asmodified by the revaluation of certain land andbuildings.

Basis of consolidationThe consolidated financial statementsincorporate those of the University and itssubsidiary undertakings for the year ended 31July 2010. The University and its wholly ownedsubsidiaries prepare statutory accounts to 31July, whereas Exemplas Holdings Limited andits subsidiary companies and joint venturesprepare statutory accounts to 31 March.Management accounts for the year to 31 July2010 for Exemplas Holdings Limited havebeen consolidated within the University’sfinancial statements. The results ofsubsidiaries acquired or disposed of during theperiod are included in the consolidated incomeand expenditure account from the date ofacquisition or up to the date of disposal. Intra-group sales and profits are eliminated fully onconsolidation.

The Group’s share of the results of associateundertakings is included in the consolidatedincome and expenditure account fromoperating surplus onwards.

Joint ventures are included under the grossequity method.

In accordance with FRS2, the activities of theStudents’ Union have not been consolidatedas it is not a subsidiary company.

Recognition of incomeRecurrent grants from funding councils arerecognised in the period in which they arereceivable.

Fee income is credited to the income andexpenditure account over the period in whichthe students are studying. Where the amountof the tuition fee is reduced, income receivableis shown net of the discount. Bursaries andscholarships are accounted for as expenditure.

Income from research grants, contracts andother services rendered is included to theextent of completion of the contract or serviceconcerned. This is generally equivalent to thesum of the relevant expenditure incurredduring the year, together with any relatedcontributions towards overhead costs. Anypayments received in advance of suchperformance are recognised on the balancesheet as liabilities. Any future predicted losseson individual long-term contracts arerecognised immediately.

Non-recurrent grants from funding councils orother bodies received in respect of theacquisition or construction of fixed assets aretreated as deferred capital grants andamortised in line with depreciation over the lifeof the assets.

Charitable donations

a) Unrestricted donationsCharitable donations are recognised in theaccounts under other operating income whenthe charitable donation has been received or if,before receipt, there is sufficient evidence toprovide the necessary certainty that thedonation will be received and the value of theincoming resources can be measured withsufficient reliability. They are expendable withinthree years.

b) Endowment fundsWhere the charitable donations are to beretained for the benefit of the institution asspecified by the donors, these are accountedfor as endowments. There are three maintypes:

1) Unrestricted permanent endowments –the donor has specified that the fund is tobe permanently invested to generate anincome stream for the general benefit ofthe institution.

2) Restricted expendable endowments – thedonor has specified a particular objectiveother than the purchase or construction of

32


tangible fixed assets, and the institutioncan convert the donated sum into income.

3) Restricted permanent endowments – thedonor has specified that the fund is to bepermanently invested to generate anincome stream to be applied to aparticular objective.

For all the above endowment funds the capitalis shown as an asset on the balance sheet.The income and expenditure are recognised inthe income and expenditure account on acash basis in the period.

Maintenance of premisesThe cost of routine corrective maintenance ischarged to the income and expenditureaccount as incurred. Where a commitment hasbeen entered into prior to 31 July and notexpended, a provision is made for workstarted prior to the year end.

Foreign currency transactionsTransactions denominated in foreigncurrencies are recorded at the rate ofexchange ruling at the date of the transaction.Monetary assets and liabilities in foreigncurrencies are translated into sterling at theyear end rates and the resulting surplus ordeficit transferred to the income andexpenditure account.

Pension schemesThe two principal pension schemes for theUniversity's staff are the Teachers PensionScheme (TPS) and the Local GovernmentPension Scheme (LGPS). Additionally, theUniversity has agreed with the UniversitiesSuperannuation Scheme (USS) thatdesignated employees may be eligible tobecome members of that scheme. Thesedefined benefit schemes are externally fundedand contracted out of the State SecondPension.

It is not possible to identify the University’sshare of the underlying assets and liabilities inthe TPS and USS schemes and hence, usingthe exemption under FRS 17 (RetirementBenefits), contributions to the scheme areaccounted for as if they were definedcontribution schemes. The employercontributions payable to the scheme arecharged as expenditure in the period in whichthey relate to.

The University is able to identify its share ofthe underlying assets and liabilities of theLGPS and thus fully adopts FRS17. Thescheme assets are measured at fair values.Scheme liabilities are measured on an actuarialbasis using the projected unit method and arediscounted at appropriate high qualitycorporate bond rates. The net surplus ordeficit, adjusted for deferred tax, is presentedseparately from other net assets on thebalance sheet. A net surplus is recognisedonly to the extent that it is recoverable by theGroup.

The current service costs and costs fromsettlements and curtailments are chargedagainst operating profit. Past service costs arespread over the period until the benefitincreases vest. Interest on the schemeliabilities and the expected return on schemeassets are included net in other financecosts/income. Actuarial gains and losses arereported in the statement of total recognisedgains and losses.

Staff employed by Exemplas Holdings Limitedand its subsidiary companies are eithermembers of the LGPS or are members of thegroup administered personal pension plan,which is a defined contribution scheme. Thecosts of providing retirement and relatedbenefits for the group administered personalpension plan are charged to the income andexpenditure account over the periods duringwhich the members are employed.

The pension scheme liability also takesaccount of the University’s unfunded pensionliability. This liability, which relates to pensionenhancements payable to staff who havetaken early retirement, was previously includedin the accounts as a provision before the fulladoption of FRS 17.

Tangible fixed assets

(a) Land and buildingsLand and buildings are stated at cost or atvaluation. On adoption of FRS 15, theinstitution followed the transitional provision toretain the book value of land and buildings,which were revalued in 1996, but not to adopta policy of revaluations of these properties inthe future. These values are retained subject tothe requirement to test assets for impairmenton an annual basis in accordance with FRS 11.

33


Where there is evidence of impairment, fixedassets are written down to their recoverableamount. Any such write down is charged tothe income and expenditure account. Thevaluation of land and buildings on 31 July1996 was £80 million and was performed byFuller Peiser.

Investment properties are stated at marketvalue with an annual revaluation and notdepreciated.

Depreciation on buildings is provided on astraight-line basis over the estimated usefullives as follows:

Freehold buildings 30-50 yearsRefurbishments 10 years

Leasehold land and buildings are amortisedover the life of the lease up to a maximum offifty years. Freehold land is not depreciated.

Assets in the course of constructionrepresent those assets which have not yetbeen brought into use. These assets aretransferred to the relevant category of assetand depreciated from the date they aresubstantially complete at the appropriate ratefor that category.

Land and buildings inherited fromHertfordshire County Council are stated inthe balance sheet at valuation on the basis ofdepreciated replacement cost and wererevalued on July 1996.

Finance costs are capitalised where they canbe directly attributable to the construction oftangible fixed assets and only for the periodof construction.

(b) EquipmentCapitalised equipment is stated at cost anddepreciated over its useful life on a straightline basis as follows:

Plant and machinery 1-15 yearsFixtures, fittings and equipment 3-10 years

LeasesLeasing agreements that transfersubstantially all the benefits and risks ofownership of an asset are treated as if theasset had been purchased outright. The

assets are included in fixed assets and thecapital elements of the leasing commitmentsare shown as obligations under financeleases. The lease rentals are treated asconsisting of capital and interest elements.The capital element is applied to reduce theoutstanding obligations and the interestelement is charged to the income andexpenditure account in proportion to thereducing capital element outstanding. Assetsheld under finance leases are depreciatedover the shorter of the lease term and theuseful economic lives of equivalent ownedassets.

Operating leases are charged against incomeon a straight-line basis over the lease term.Benefits received as an incentive to sign anoperating lease, are spread on a straight-linebasis over the shorter of the lease term or thefirst review date, at which the rent is firstexpected to be adjusted to the prevailingmarket rate.

InvestmentsFixed asset investments that are not listed ona recognised stock exchange are carried athistorical cost less any provision forimpairment of their value.

Endowment asset investments are includedin the balance sheet at market value. Gainsand losses on revaluations of endowmentassets are recognised in the statement oftotal recognised gains and losses.

Current asset investments are included at thelower of cost and net realisable value.

Investments in subsidiary and associatedcompanies are valued at the lower of cost ornet realisable value.

StocksStocks and work in progress are valued atthe lower of cost and net realisable value.Cost includes staff time, direct materials andattributable overheads. Where necessary,provision is made for obsolete, slow movingand defective stocks.

Taxation statusThe University is an exempt charity within themeaning of Schedule 2 of the Charities Act1993 and as such within the meaning of Para

34


1 of Schedule 6 to the Finance Act 2010.Accordingly, the University is potentiallyexempt from taxation in respect of income orcapital gains received within categoriescovered by Sections 478-488 of theCorporation Taxes Act 2010 (formerly enactedin Section 505 of the Income and CorporationTaxes Act 1988), or Section 256 of theTaxation of Chargeable Gains Act 1992 to theextent that such income or gains are appliedto exclusively charitable purposes. TheUniversity receives no similar exemption inrespect of Value Added Tax.

The University’s subsidiary companies aresubject to corporation tax and VAT in the sameway as any commercial organisation.

Deferred taxDeferred tax is recognised in respect of alltiming differences that have originated but notreversed at the balance sheet date wheretransactions or events that result in anobligation to pay more tax in the future, or aright to pay less tax in the future, haveoccurred at the balance sheet date.

Timing differences are differences between thetaxable profits and the results as stated in thefinancial statements. Deferred tax is measuredat the average tax rates expected to apply inthe periods in which the timing differences areexpected to reverse based on rates and lawsthat have been enacted or substantiallyenacted by the balance sheet date.

Deferred tax is measured on a non-discountedbasis.

ProvisionsProvisions are recognised when the institutionhas a present legal or constructive obligationas a result of a past event, it is probable that atransfer of economic benefit will be required tosettle the obligation and a reliable estimate canbe made of the amount of the obligation.

Agency arrangementsFunds the institution receives and disburses aspaying agent on behalf of a funding body orother body, where the institution is exposed tominimal risk or enjoys minimal economicbenefit related to the receipt and subsequentdisbursement of the funds, are excluded fromthe income and expenditure of the institution.

GoodwillGoodwill represents the difference betweenthe cost of an acquired operation and theaggregate of the fair values of that operation’sidentifiable assets and liabilities. Positivepurchased goodwill is capitalised andclassified as an asset on the balance sheet.Where goodwill is regarded as having limiteduseful economic life, it is amortised over thatlife up to a maximum of twenty years.Currently goodwill is amortised over a periodof twenty years. Impairment tests are carriedout at the end of the first year and thereaftersubject to normal periodic reviews forindications of impairment.

Cash flows and liquid resourcesCash flows comprise increases or decreases incash. Cash includes cash in hand, cash atbank, and deposits repayable on demand.Deposits are repayable on demand if they areavailable within twenty-four hours withoutpenalty. No other investments, however liquid,are included as cash.

Liquid resources comprise assets held asreadily disposable store of value. They includeterm deposits, government securities and loanstock held as part of the institution’s treasurymanagement activities. They exclude any suchassets held as endowment asset investments.

Joint ventures and associatesInvestments in joint ventures and associatedundertakings are carried in the consolidatedbalance sheet at the Group's share of their netassets at the date of acquisition and of theirpost-acquisition retained profits or lossestogether with any goodwill arising on theacquisition, net of amortisation. The investor'sshare of the results is included within theconsolidated income and expenditure account.

The income and expenditure account alsoshows the Group's share of the joint venture'sturnover and the balance sheet shows thegross assets and liabilities in amplification ofthe net investment in joint ventures.

35

Notes to the accounts

1. Funding Council grants2010 2009

Higher Training and Learning Total TotalEducation Development and Skills Funding FundingFunding Agency for Council Council Council

Council for Schools grants grantsEngland

Notes £’000 £’000 £’000 £’000 £’000

Recurrent grants 53,059 3,160 - 56,219 57,893Selective initiatives 4,973 1,228 - 6,201 6,539

Release of deferredcapital grants:Buildings 23 1,748 - - 1,748 1,693Equipment 23 453 - - 453 358______ ______ ______ ______ ______

60,233 4,388 - 64,621 66,483______ ______ ______ ______ ______

2. Tuition fees and education contracts2010 2009£’000 £’000

UK higher education students 51,384 42,601European Union (EU) (excluding UK) students 1,013 1,117Non–EU students 25,841 17,895UK further education students - 64______ ______

Total fees paid by or on behalf of individual students 78,238 61,677

Education contracts 18,067 16,710______ ______

96,305 78,387______ ______

3. Research grants and contracts2010 2009£’000 £’000

Research councils 2,522 2,046UK based charities 368 321European Commission 5,261 2,880Other grants and contracts 2,973 4,363______ ______

11,124 9,610______ ______

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4. Other operating income2010 2009£’000 £’000

Residences, catering and conferences 16,697 15,259Other services rendered 68,025 58,288Release of capital grant 240 483Other income 5,573 6,124_______ _______

90,535 80,154_______ _______

5. Endowment and investment income2010 2009£’000 £’000

Income from permanent endowments 50 66Interest receivable 210 441_______ _______

260 507_______ _______

6. Staff costs

The average weekly number of full time equivalent(FTE) employees (including senior post-holders)during the year was made up as follows: 2010 2009

Numbers Numbers

Teaching departments 1,194 1,291Teaching support services 161 168Other support services 43 28Administration and central services 393 388Premises 88 158Other 429 425_______ _______

2,308 2,458_______ _______

The aggregate payroll costs of these employees were as follows:

2010 2009£’000 £’000

Teaching departments 70,468 69,594Teaching support services 6,520 6,516Other support services 2,020 1,333Administration and central services 14,704 17,885Premises 3,597 3,608Other 15,568 13,277_______ _______

112,877 112,213_______ _______

37


6. Staff costs (continued)

2010 2009£’000 £’000

Staff costs:Wages and salaries 93,903 92,946Social security costs 7,354 7,583Other pension costs 11,620 11,684_______ _______

112,877 112,213_______ _______

2010 2009£’000 £’000

Employment costs for staff on permanent contracts 97,976 89,770Employment costs for staff on short-term contracts 14,901 22,443_______ _______

112,877 112,213_______ _______

During early Summer 2009, the University undertook a review of the existing faculty structure resulting in thestreamlining of the number of faculties to four. In addition the University offered a Voluntary Severance Scheme tostaff. The costs of these restructuring exercises are shown on the consolidated income and expenditure accountas an exceptional item in 2008/09.

Remuneration of higher paid staff other than the Vice-Chancellor, excluding employer’s pension and nationalinsurance contributions but including benefits, fall within the following bands:

2010 2009Numbers Numbers

£100,000 - £110,000 8 3£110,001 - £120,000 1 4£120,001 - £130,000 1 2£130,001 - £140,000 - 3£140,001 - £150,000 - -£150,001 - £160,000 1 1£160,001 - £170,000 - 1_______ _______

11 14_______ _______

Governors did not receive any payments except for reimbursement of travel and subsistence expenses incurred inthe course of their duties. The University also provides all Governors with computer equipment to enable them tocarry out their duties. The total amount of expenditure in 2009/10 for reimbursement of travel and subsistenceexpenses amounted to £8,200.

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7. Emoluments of the Vice-Chancellor

Emoluments of the Vice-Chancellor, excluding national insurance contributions

2010 2009£’000 £’000

Salary 251 247Benefits in kind 2 2Pension contributions 35 35_______ _______

288 284_______ _______

The University’s pension contribution to the Teachers Pension Scheme is paid at the same rate for the Vice-Chancellor as for other academic staff. In the year the Vice-Chancellor donated £7,700 (2009: £17,893) to theUniversity of Hertfordshire Charitable Trust.

8. Analysis of expenditure by activity

Staff Other Interest 2010 2009costs operating payable total total

expenses£’000 £’000 £’000 £’000 £’000

Academic departments 65,212 30,288 - 95,500 90,686Academic services 6,761 5,360 - 12,121 11,688Administration* 15,017 10,717 - 25,734 25,933Premises 3,030 18,196 2,378 23,604 12,049Residences, catering and conferences 2,992 14,010 340 17,342 14,059Research grants and contracts 4,956 4,878 - 9,834 7,919Other expenses 14,909 17,202 3,404 35,515 36,090_______ _______ _______ _______ _______

112,877 100,651 6,122 219,650 198,424_______ _______ _______

Depreciation 12,447 10,467________ ________

232,097 208,891________ ________

The depreciation charge has been funded by:2010 2009

Notes £’000 £’000

Deferred capital grants released 2,491 2,088Revaluation reserve released 25 786 774General income 9,170 7,605_______ _______

12,447 10,467_______ _______

* Administration expenses include internal auditors remuneration of £nil (2009: £nil) and external auditorsremuneration of £102,000 (2009: £155,000). The external auditors remuneration includes £11,810 in respect ofnon-audit work (2009: £13,000).

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9. Taxation2010 2009£’000 £’000

Current tax:UK corporation tax on surplus for the year 141 23______ ______

Tax on surplus on ordinary activities 141 23______ ______

2010 2009£’000 £’000

Current tax reconciliation:Surplus/(deficit) on ordinary activities before tax 2,852 (1,185)______ ______

Surplus on ordinary activities multiplied by standard rate in the UK (28%) (2009: 28%) 799 (332)

Effects of:Depreciation for the period in excess of capital allowances 105 220Non taxable (income)/expenditure (2,591) 143Expenses not deductible for tax purposes 146 116Tax losses 27 (13)Other timing differences (145) (117)Tax at marginal rate - (5)Adjustments in respect of prior years (88) -Revenue expenditure capitalised (21) -Timing differences relating to pension liability 1,909 11______ ______

Current tax charge for the year 141 23______ ______

The above taxation charge relates to the profits of Exemplas Holdings Limited and its subsidiary companies.

10. Interest payable and other finance costs2010 2009

Notes £’000 £’000On bank loans, overdrafts and other loans:Repayable within five years, by instalments 9 -Repayable within five years - 473Repayable wholly or partly in more than five years 1,910 463

Finance leases 753 769Other interest payable 139 -Net charge on pension scheme 32 3,311 1,713______ ______

6,122 3,418______ ______

11. Surplus on continuing operations for the period

The University made a surplus on continuing operations for the period after the depreciation of tangible fixedassets, disposal of assets and taxation of £1,831,000 (2009: deficit of £1,343,000). This surplus includes a profitarising on the sale of fixed assets of £nil (2009: £854,000) and exceptional restructuring costs of £nil (2009:£3,533,000).

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12. Tangible fixed assets

Group Land and Buildings Assets in the Fixtures, Plant andLong course of fittings and machinery

Freehold leasehold construction equipment Total

£’000 £’000 £’000 £’000 £’000 £’000

Cost or valuation

At 1 August 2009 255,383 16,083 43,754 15,617 7,247 338,084Prior year adjustment (7,496) - - - - (7,496)_______ _______ _______ _______ ______ ______

Restated 1 August 2009 247,887 16,083 43,754 15,617 7,247 330,588

Additions at cost 879 2,355 13,848 1,409 1,248 19,739Transfers between accounts 47,960 - (47,477) (483) - -Less disposals in year (124) - (218) (1,895) (684) (2,921)_______ _______ _______ _______ _______ _______

At 31 July 2010 296,602 18,438 9,907 14,648 7,811 347,406_______ _______ _______ _______ _______ _______

Depreciation

At 1 August 2009 59,068 2,542 - 6,424 3,910 71,944Prior year adjustment (1,462) - - - - (1,462)_______ _______ _______ _______ ______ ______

Restated 1 August 2009 57,606 2,542 - 6,424 3,910 70,482

Charge for the year 8,288 398 - 3,203 558 12,447Less disposals in year (119) - - (1,796) (619) (2,534)_______ _______ _______ _______ ______ ______

At 31 July 2010 65,775 2,940 - 7,831 3,849 80,395_______ _______ _______ _______ ______ ______

Net book valueAt 31 July 2010 230,827 15,498 9,907 6,817 3,962 267,011_______ _______ _______ _______ ______ _______

At 31 July 2009 196,315 13,541 43,754 9,193 3,337 266,140_______ _______ _______ _______ ______ _______

Inherited 28,433 - - - - 28,433Financed by capital grant 31,987 - 4,587 55 - 36,629Other 170,407 15,498 5,320 6,762 3,962 201,949_______ _______ _______ _______ _______ _______

Net book valueAt 31 July 2010 230,827 15,498 9,907 6,817 3,962 267,011_______ _______ _______ _______ _______ _______

41


12. Tangible fixed assets (continued)

University Land and Assets in the Fixtures,buildings course of fittings andFreehold construction equipment Total

£’000 £’000 £’000 £’000Cost or valuation

At 1 August 2009 203,749 35,377 11,506 250,632Prior year adjustment (7,496) - - (7,496)_______ ______ ______ _______

Restated 1 August 2009 196,253 35,377 11,506 243,136

Additions at cost 601 13,607 743 14,951Transfers between accounts 39,583 (39,100) (483) -Less disposals in the year - (218) - (218)_______ ______ ______ _______

At 31 July 2010 236,437 9,666 11,766 257,869_______ ______ ______ _______

Depreciation

At 1 August 2009 47,852 - 3,908 51,760Prior year adjustment (1,462) - - (1,462)_______ ______ ______ _______

Restated 1 August 2009 46,390 - 3,908 50,298

Charge for the year 6,669 - 2,858 9,527Less disposals in the year - - - -_______ ______ ______ _______

At 31 July 2010 53,059 - 6,766 59,825_______ ______ ______ _______

Net book valueAt 31 July 2010 183,378 9,666 5,000 198,044_______ ______ ______ _______

At 31 July 2009 155,897 35,377 7,598 198,872_______ ______ ______ _______

Inherited 28,433 - - 28,433Financed by capital grant 31,987 4,587 55 36,629Other 122,958 5,079 4,945 132,982_______ ______ ______ _______

Net book valueAt 31 July 2010 183,378 9,666 5,000 198,044_______ ______ ______ _______

42


12. Tangible fixed assets (continued)

The above includes assets held under finance leases. The net book value of these assets as at 31 July 2010 was:

2010 2010 2009 2009Group University Group University£’000 £’000 £’000 £’000

Buildings 13,151 - 13,549 -Plant and Machinery 1,111 - - -______ ______ ______ ______

14,262 - 13,549 -______ ______ ______ ______

The depreciation charge for the year was:2010 2010 2009 2009Group University Group University£’000 £’000 £’000 £’000

Buildings 398 - 398 -Plant and Machinery 72 - - -______ ______ ______ ______

470 - 398 -______ ______ ______ ______

The above includes an investment property purchased on 14 August 2008 at a cost of £234,000. This asset is notdepreciated.

Buildings with a net book value of £72.3 million and a cost of £82.8 million have been partly funded from Treasurysources. Should these particular buildings be sold, the University would either have to surrender part of theproceeds to the Treasury or use them in accordance with the Financial Memorandum with the Higher EducationFunding Council for England.

The amount of finance costs capitalised in the year amounts to £381,000, the accumulated amount of capitalisedfinance costs is £1,846,000. This is included in freehold land and buildings.

An external valuation of the University's land and buildings as at 31 July 1996 was carried out by Fuller Peiser,qualified Chartered Surveyors, in accordance with the Practice Statements of the Royal Institute of CharteredSurveyors Appraisal and Valuation manual. The valuation represented the surveyor’s opinion of the values of thefreehold and leasehold interests in the land and buildings comprising the various properties on the basis ofexisting use value, depreciated replacement cost or open market value as appropriate, resulting in a valuation of£80 million. The surplus was transferred to the revaluation reserve.

The major site at Hatfield, east of College Lane, is subject to a deed of gift and conveyance dated 12 December1946 for the purposes of education to the charity called Hatfield Polytechnic. The charity is part of the assetstransferred from Hertfordshire County Council and trusteeship now rests with the Board of Governors of theUniversity. Any proposed change in use or ownership is subject to the agreement of the Charity Commission.

It is a condition of funding, imposed by the Secretary of State and the Treasury, that no transaction involving eitherthe acquisition of land and buildings to be maintained with the aid of funding from the Higher Education FundingCouncil for England or the disposal of land and buildings purchased with the aid of public funds, shall be enteredinto without the prior approval of the Council.

The University entered into a Private Finance Initiative scheme, through its subsidiary company Polyfield PropertyLimited, with a contractor for the construction of sports facilities and for the facilities management of thosepremises for a period of thirty years. These facilities, known as the Hertfordshire Sports Village, were completed inSeptember 2003. Under the terms of the scheme the contractor raised the finance for the construction ofbuildings which have subsequently been let on a long lease to Polyfield Property Limited. The transactions for thesports facilities have been reflected in the accounts for the University Group and Polyfield Property Limited as afixed asset under Land and Buildings (Long Leasehold) at a net book value of £13.1 million with a consequential,and matching, finance lease as a long-term creditor. At the end of the lease period ownership of the property willrevert to Polyfield Property Limited.

43


13. Investments


Balance at 1 August 1,604 69,119 133 68,873Additions - - 1,566 55,647Disposals (59) - (95) (55,401)______ ______ ______ ______

Balance at 31 July 1,545 69,119 1,604 69,119______ ______ ______ ______

Representing:Subsidiary undertakings - 69,081 - 69,081Other 1,545 38 1,604 38______ ______ ______ ______

1,545 69,119 1,604 69,119______ ______ ______ ______

The University’s subsidiaries (all of which are registered in England and Wales) and its percentage shareholding ineach are as follows:

Company Nature of Business Shareholding £1 No. ofOrdinary Shares Shares

UH Holdings Limited Holding Company 100% 13,434,020Student Forum Limited Dormant 100% Limited by

guarantee

The University consolidates the results of the University of Hertfordshire Charitable Trust, but does not consolidateThe Building Hub Limited (a company limited by guarantee) on the basis of immateriality. The University has a 50%interest and exercises dominant influence in both the University of Hertfordshire Charitable Trust and The BuildingHub Limited.

The University does not consolidate the accounts of the Students’ Union as there is not a relationship of dominantinfluence and all decisions are exercised by the Students’ Union Executive.

44


13. Investments (continued)

The subsidiary companies of UH Holdings Limited (all registered in England and Wales except UH Global Education (AsiaPacific), Sdn Bhd which is registered in Malaysia) and its percentage shareholding in each is as follows:

Company Nature of business Shareholding No. of£1 ordinary shares shares

Cimtech Limited Consultancy 100% 2UH Health Limited Healthcare training 100% 2UH Ventures Limited Training and consultancy 100% 2Universitybus Limited Transport services 100% 2Unisecure Limited Dormant 100% 3UH Hospitality Limited Conference services 100% 3Exemplas Holdings Limited Business advice and support 98% 98UH Recordings Limited Music recording 100% 2Uno Buses Limited Transport services 100% 1Polyfield Property Limited Provision of property services 100% 16,099,854UH Global Education (Asia-Pacific) Sdn Bhd Overseas student recruitment 100% 2UH Invest Limited Investment in spin-off companies 100% 2The FIT Corporation Limited Human Resource Management Development 100% 1,000Corporate FIT Science Limited Provision and development of executive

development products online 100% 60,000

During the year UH Ventures Limited acquired 100% holding in the FIT Corporation Limited, 34% of the holdingwas transferred from UH Holdings Limited and the balance from the majority shareholder.

UH Hospitality Limited, Cimtech Limited, UH Health Limited, UH Invest Limited and UH Recordings Limitedceased trading on 31 July 2010. The trading activities of UH Hospitality Limited and Cimtech Limited will betransferred to UH Ventures Limited; the trading activities of UH Health Limited, UH Invest Limited and UHRecordings Limited will be transferred to the University of Hertfordshire.

The subsidiary companies of Exemplas Holdings Limited (all of which are registered in England and Wales) andits percentage shareholding in each are as follows:

Company Nature of business Shareholding No. of£1 ordinary shares shares

Hertfordshire Business Centre Services Limited Provision of services to business 100% 2Exemplas Limited Provision of services to business 100% 2BioPark Hertfordshire Limited Letting of property 100% 2Herts IDB Limited Dormant 100% 2Polyfield Services Limited Provision of services to business 100% 14London Brokerage Limited Provision of services to business 100% 2Hertfordshire Local Enterprise Partnership Limited Dormant 100% 2Bedfordshire Local Enterprise Partnership Limited Dormant 100% 2Suffolk Enterprise Partnership Limited Dormant 100% 2Cambridgeshire Local Enterprise Partnership Limited Dormant 100% 2Norfolk Enterprise Partnership Limited Dormant 100% 2Corporate Degrees Limited Dormant 100% 2Hertfordshire Business Centre Limited Dormant 100% 2Hertfordshire Development Organisation Limited Dormant 100% 2Employer Training Services Dormant 100% 2South East IDB Limited Dormant 100% 2Exemplas Training Limited Dormant 100% 2East of England Brokerage Limited Dormant 100% 2

All of the above subsidiaries are consolidated in the Group accounts.

Exemplas Holdings Limited also has a 50% interest in East of England IDB Limited and Yorkshire &Humberside IDB Limited, which run the Business Link Contracts for the East of England and Yorkshire &Humberside respectively. These have been accounted for as joint ventures.

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14. Intangible fixed assets2010 2010 2009 2009Group University Group University£’000 £’000 £’000 £’000

Balance at 1 August 1,655 - 1,744 -Amortisation (89) - (89) -______ ______ ______ ______

Balance at 31 July 1,566 - 1,655 -______ ______ ______ ______

15. Endowment asset investments2010 2010 2009 2009Group University Group University£’000 £’000 £’000 £’000

Balance at 1 August 2,171 592 2,178 579New endowments invested 75 - 205 -Increase/(decrease) in cash balances held forendowment funds 5 3 (74) 17Increase/(decrease) in market value of investments 146 7 (138) (4)______ ______ ______ ______

Balance at 31 July 2,397 602 2,171 592______ ______ ______ ______

Represented by:Securities 1,344 53 1,199 46Cash at bank held for endowment funds 1,053 549 972 546______ ______ ______ ______

Total 2,397 602 2,171 592______ ______ ______ ______

16. Stocks and work in progress2010 2010 2009 2009Group University Group University£’000 £’000 £’000 £’000

Work in progress 260 114 214 83______ ______ ______ ______

17. Debtors2009 2009

2010 2010 RESTATED RESTATEDGroup University Group University£’000 £’000 £’000 £’000

Amounts falling due within one year:Trade debtors 15,729 12,652 12,597 9,947Other debtors 942 448 713 66Deferred tax 45 - 2 -Amounts due from subsidiaries - 11,286 - 7,653Prepayments and accrued income 8,815 4,683 12,908 4,732______ ______ ______ ______

25,531 29,069 26,220 22,398Amounts falling due after more than one year:Amounts due from subsidiaries - 1,311 - 3,599______ ______ ______ ______

25,531 30,380 26,220 25,997______ ______ ______ ______

46


18. Deferred tax asset


Other timing differences 45 - 2 -______ ______ ______ ______

The above deferred tax asset relates to Exemplas Holdings Limited and its subsidiary companies.

19. Creditors: amounts falling due within one year


Notes £’000 £’000 £’000 £’000

Bank loan and overdraft 21a 1,270 834 20,324 20,324Obligation under finance lease 21b 502 - 313 -Payments received on account 12,055 12,708 8,360 8,360Research and other commercial activity paymentsreceived in advance 6,914 6,262 6,684 6,684Trade creditors 6,208 5,476 3,259 3,137Other creditors 2,064 1,982 3,348 3,174Amounts due to subsidiaries - 11,707 - 15,299Corporation tax 286 - 64 -Other taxation and social security 2,797 2,302 3,209 2,848Accruals and deferred income 22,880 10,089 22,702 8,140Deferred revenue grants 6,377 6,376 2,452 2,394______ _______ ______ ______

61,353 57,736 70,715 70,360______ _______ ______ ______

The corporation tax creditor relates to Exemplas Holdings Limited and its subsidiary companies.

20. Creditors: amounts falling due after more than one year


Notes £’000 £’000 £’000 £’000

Bank loan and overdraft 21a 69,838 67,445 41,809 41,809Other creditors 36 - 81 -Obligation under finance leases 21b 14,724 - 14,052 -Amounts due to subsidiaries - 5,500 - -______ ______ ______ ______

84,598 72,945 55,942 41,809______ ______ ______ ______

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21. Borrowings

a. Bank loans and overdrafts and other loans2010 2010 2009 2009Group University Group University£’000 £’000 £’000 £’000

Bank loans and overdrafts are repayable as follows:

In one year or less 1,270 834 20,324 20,324Within two and five years 25,776 24,141 3,192 3,192In five years or more 44,062 43,304 38,617 38,617______ ______ ______ ______

71,108 68,279 62,133 62,133______ ______ ______ ______Group loans are repayable as follows:

In one year or less - - - 8,000Within two and five years - 5,500 - -In five years or more - - - -______ ______ ______ ______

- 5,500 - 8,000______ ______ ______ ______

The outstanding bank loans as at 31 July 2009 were a twenty-five year term loan facility for £11 million, athirty-four year revolving term facility for £40 million and an unsecured loan facility. These facilities, which arelinked to the base rate, offer the option to fix part of the loan at certain times. The term loan facility of £11million is fully drawn down. The outstanding balance at 31 July 2010 was £10.4 million of which £5.6 million isfixed at a rate of 5.44%. As at 31 July 2010 £37.9 million of the £40 million facility had been drawn down. Ofthis balance £8 million is fixed at a rate of 5.39%, £2.3 million at 5.2% and £20 million at 4.5%. A £20 millionfixed term loan, at a rate of 1.5% renewable on a quarterly basis was outstanding at 31 July 2010.

b. Finance leases

The net finance lease obligations to which the Group is committed are:


In one year or less 502 - 313 -Between two and five years 2,200 - 1,423 -In five years or more 12,524 - 12,629 -______ ______ ______ ______

15,226 - 14,365 -______ ______ ______ ______

The above represents the finance lease in respect of the Hertfordshire Sports Village and a number of buses.

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22. Provision for liabilities

Group Balance at Provision Increase Balance at31 July 2010 utilised 1 August 2009

£’000 £’000 £’000 £’000

Long term maintenance provision 1,154 (765) 1,154 765VAT capital goods scheme provision 978 (292) - 1,270______ ______ ______ ______

2,132 (1,057) 1,154 2,035______ ______ ______ ______

UniversityBalance at Provision Increase Balance at31 July 2010 utilised 1 August 2009

£’000 £’000 £’000 £’000

Long term maintenance provision 1,154 (765) 1,154 765______ ______ ______ ______

The long-term maintenance provision is for costs in relation to the maintenance programme for premises occurringaround the year end but which have commenced before 31 July 2010.

The VAT capital goods scheme provision is in respect of VAT claw back on building costs of one of the University’sLearning Resource Centre buildings.

49


23. Deferred capital grants

Group Funding OtherCouncil grants grants Total

£’000 £’000 £’000At 1 August 2009Buildings 26,510 7,836 34,346Equipment 2,238 268 2,506______ ______ ______

28,748 8,104 36,852

Prior year adjustmentBuildings 5,940 - 5,940

Restated 1 August 2009Buildings 32,450 7,836 40,286Equipment 2,238 268 2,506______ ______ ______

34,688 8,104 42,792ReclassificationBuildings (347) (12) (359)Equipment 360 (64) 296______ ______ ______

13 (76) (63)

Cash receivedBuildings 5,881 - 5,881Equipment 886 - 886______ ______ ______

6,767 - 6,767______ ______ ______Released to income and expenditureBuildings 1,748 213 1,961Equipment 453 77 530______ ______ ______

2,201 290 2,491______ ______ ______At 31 July 2010Buildings 36,236 7,611 43,847Equipment 3,031 127 3,158______ ______ ______

39,267 7,738 47,005______ ______ ______

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23. Deferred capital grants (continued)

University Funding OtherCouncil grants grants Total

£’000 £’000 £’000At 1 August 2009Buildings 26,510 7,836 34,346Equipment 2,238 268 2,506______ ______ ______

28,748 8,104 36,852

Prior year adjustmentBuildings 5,940 - 5,940

Restated 1 August 2009Buildings 32,450 7,836 40,286Equipment 2,238 268 2,506______ ______ ______

34,688 8,104 42,792ReclassificationBuildings (347) (12) (359)Equipment 360 (64) 296______ ______ ______

13 (76) (63)

Cash receivedBuildings 5,881 265 6,146Equipment 886 - 886______ ______ ______

6,767 265 7,032______ ______ ______Released to income and expenditureBuildings 1,748 213 1,961Equipment 453 77 530______ ______ ______

2,201 290 2,491______ ______ ______At 31 July 2010Buildings 36,236 7,876 44,112Equipment 3,031 127 3,158______ ______ ______

39,267 8,003 47,270______ ______ ______

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24. Endowment funds

Group Unrestricted Restricted 2010 2009permanent permanent Total Total

£’000 £’000 £’000 £’000Balance at 1 AugustCapital 817 984 1,801 1,734Accumulated income 316 54 370 444______ ______ ______ ______

1,133 1,038 2,171 2,178

New endowments - 75 75 205

Investment income 23 27 50 66Expenditure (27) (18) (45) (140)Increase/(decrease) in market value of investments 70 76 146 (138)______ ______ ______ ______

Balance at 31 July 1,199 1,198 2,397 2,171______ ______ ______ ______

Represented by:Capital 886 1,135 2,021 1,801Accumulated income 313 63 376 370______ ______ ______ ______

Total 1,199 1,198 2,397 2,171______ ______ ______ ______

University Unrestrictedpermanent

2010 2009Total Total£’000 £’000

Balance at 1 AugustCapital 502 506Accumulated income 90 73______ ______

592 579

New endowments - -Investment income 3 17Expenditure - -Increase/(decrease) in market value of investments 7 (4)______ ______

Balance at 31 July 602 592______ ______

Represented by:Capital 509 502Accumulated income 93 90______ ______

Total 602 592______ ______

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25. Reserves

Group Income andexpenditure Pension Revaluation

reserve reserve reserve Total£’000 £’000 £’000 £’000

At 1 August 2009 102,777 (62,893) 34,511 74,395

Prior year adjustments (1,784) - (10,190) (11,974)_______ _______ _______ _______

Restated 1 August 2009 100,993 (62,893) 24,321 62,421

Transfer to endowments (5) - - (5)Transfer to income and expenditure 2,835 (2,835) - -Contributions to depreciation 786 - (786) -Surplus after depreciation of assets at valuation and tax 2,711 - - 2,711

Actuarial gain - 34,289 - 34,289Past service gain relating to pension scheme - 8,066 - 8,066_______ _______ _______ _______

At 31 July 2010 107,320 (23,373) 23,535 107,482_______ _______ _______ _______

The consolidated income and expenditure reserves include £6.7 million in respect of Exemplas Holdings Limitedand its subsidiary companies. According to that company’s Memorandum of Association, these reserves cannotbe transferred to the shareholders by way of dividend, bonus or other distribution.

Of this amount £700,000 represents the Exemplas Holdings Limited group share of reserves belonging to BusinessLink Yorkshire Limited. This is a contract cessation reserve which is intended to cover potential liabilities that mayarise over the life of the Business Link contract. It is anticipated that the wind-up liability will principally accrue inrelation to personnel costs. A target figure for this reserve represents the company’s share of 100% of theestimated contract cessation costs. By virtue of the company’s main contract, this reserve may only be used forthis specific purpose.

University Income andexpenditure Pension Revaluation

reserve reserve reserve Total£’000 £’000 £’000 £’000

At 1 August 2009 111,902 (60,734) 33,371 84,539Prior year adjustments (1,290) - (10,190) (11,480)_______ _______ _______ _______

Restated 1 August 2009 110,612 (60,734) 23,181 73,059

Transfer to endowments (3) - - (3)Transfer to income and expenditure 2,737 (2,737) - -Contributions to depreciation 786 - (786) -Surplus after depreciation of assets at valuation and tax 1,831 - - 1,831

Actuarial gain - 31,537 - 31,537Past service gain relating to pension scheme - 7,617 - 7,617_______ _______ _______ _______

At 31 July 2010 115,963 (24,317) 22,395 114,041_______ _______ _______ _______

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26. Reconciliation of net cash flow from operating activities

2010 2009Notes £’000 £’000

Operating surplus/(deficit) before tax 2,852 (1,185)Investment income (565) (441)Endowment income (50) (66)Decrease in deferred capital grant 23 (2,491) (2,584)Depreciation 12 12,447 10,467Amortisation of goodwill 14 89 89Profit on sale of fixed assets (35) (528)Interest payable 2,811 1,705Pension costs 2,835 379(Decrease)/increase in stocks (46) 34Increase/(decrease) in debtors 688 (9,764)Increase in creditors 10,069 6,394Increase in provisions 97 1,527_______ _______

Net cash inflow from operating activities 28,701 6,027_______ _______

27. Returns on investments and servicing of finance2010 2009£’000 £’000

Income from endowments 50 30Other interest received 565 360Interest paid (2,676) (2,813)_______ _______

Net cash inflow from returns on investments and servicing of finance (2,061) (2,423)_______ _______

28. Capital expenditure and financial investment2010 2009£’000 £’000

Payments to acquire tangible fixed assets (20,545) (44,856)Investments acquired - (1,566)Endowment asset investments acquired (75) (204)Receipts from sales of tangible fixed assets 116 1,866Deferred capital grant received 23 6,767 5,912_______ _______

Net cash outflow from capital expenditure and financial investment (13,737) (38,848)_______ _______

29. Management of liquid resources2010 2009£’000 £’000

Deposits to short-term investments (6,075) (698)_______ _______

Net cash outflow from management of liquid resources (6,075) (698)_______ _______

54


30. Financing2010 2009£’000 £’000

Debt due beyond a year:

New long term loans 8,975 35,581Capital element of finance lease repayments/principal (457) (298)_______ _______

Net cash inflow from financing 8,518 35,283_______ _______

31. Analysis of changes in net debt/(net funds)2009 Cashflows Other 2010Group changes Group

Notes £’000 £’000 £’000 £’000

Cash at bank and in hand 4,708 16,664 - 21,372Endowment bank balance 15 972 81 - 1,053_______ _______ _______ _______

5,680 16,745 - 22,425

Debt due over more than 1 year:Long term loans 20 (41,809) - (28,029) (69,838)Obligations under finance lease 20 (14,052) - (672) (14,724)

Debt due under 1 year:Bank loan (20,324) (8,975) 28,029 (1,270)Obligation under finance lease 19 (313) 457 (646) (502)

Short term deposits 1,876 6,075 - 7,951_______ _______ _______ _______

(68,942) 14,302 (1,318) (55,958)_______ _______ _______ _______

32. Pension schemes

The two principal pension schemes for theUniversity's staff are the Teachers’ Pension Scheme(TPS) and the Local Government Pension Scheme(LGPS). Additionally, the University has agreed withthe Universities Superannuation Scheme (USS) thatdesignated employees may be eligible to becomemembers of that scheme. The assets of theschemes are held in separate administered funds.

Teachers’ Pension Scheme (TPS)The Teachers' Pension Scheme (TPS) is a statutory,contributory, defined benefit scheme. Theregulations under which the TPS operates are theTeachers' Pensions Regulations 1997, as amended.These regulations apply to teachers in schools andother educational establishments in England andWales maintained by local authorities, to teachers in

many independent and voluntary-aided schools,and to teachers and lecturers in establishments offurther and higher education. Membership isautomatic for full-time teachers and lecturers andfrom 1 January 2007 automatic too for teachers andlecturers in part-time employment followingappointment or a change of contract. Teachers andlecturers are able to opt out of the TPS.

Although teachers and lecturers are employed byvarious bodies, their retirement and other pensionbenefits, including annual increases payable underthe Pensions (Increase) Acts are, as provided for inthe Superannuation Act 1972, paid out of moniesprovided by Parliament. Under the unfunded TPS,teachers' contributions on a 'pay-as-you-go' basis,and employers' contributions, are credited to theExchequer under arrangements governed by theabove Act.

55


The Teachers' Pensions Regulations require anannual account, the Teachers' Pension Budgetingand Valuation Account, to be kept of receipts andexpenditure (including the cost of pensions’increases). From 1 April 2001, the Account has beencredited with a real rate of return (in excess of priceincreases and currently set at 3.5%), which isequivalent to assuming that the balance in theAccount is invested in notional investments thatproduce that real rate of return.

Valuation of the Teachers’ Pension SchemeNot less than every four years the GovernmentActuary (GA), using normal actuarial principles,conducts a formal actuarial review of the TPS. Theaim of the review is to specify the level of futurecontributions.

The contribution rate paid into the TPS is assessedin two parts. First, a standard contribution rate(SCR) is determined. This is the contribution,expressed as a percentage of the salaries ofteachers and lecturers in service or entering serviceduring the period over which the contribution rateapplies, which if it were paid over the entire activeservice of these teachers and lecturers wouldbroadly defray the cost of benefits payable inrespect of that service. Secondly, a supplementarycontribution is payable if, as a result of the actuarialinvestigation, it is found that accumulated liabilitiesof the Account for benefits to past and presentteachers, are not fully covered by standardcontributions to be paid in future and by the notionalfund built up from past contributions. The totalcontribution rate payable is the sum of the SCR andthe supplementary contribution rate.

The last valuation of the TPS related to the period 1April 2001 - 31 March 2004. The GA's report ofNovember 2006 revealed that the total liabilities ofthe scheme (pensions currently in payment and theestimated cost of future benefits) amounted to£166,500 million. The value of the assets (estimatedfuture contributions together with the proceeds fromthe notional investments held at the valuation date)was £163,240 million. The assumed real rate ofreturn is 3.5% in excess of prices and 2% in excessof earnings. The rate of real earnings growth isassumed to be 1.5%. The assumed gross rate ofreturn is 6.5%.

As from 1 January 2007, and as part of the cost-sharing agreement between employers’ andteachers’ representatives, the SCR has beenassessed at 19.75%, and the supplementarycontribution rate has been assessed to be 0.75% (tobalance assets and liabilities as required by theregulations within fifteen years); a total contribution

rate of 20.5%. This translates into an employeecontribution rate of 6.4% and employer contributionrate of 14.1% payable. The cost-sharing agreementhas also introduced – effective for the first time forthe 2008 valuation – a 14% cap on employercontributions payable.

A copy of the GA’s 2004 valuation report can befound on the TeacherNet website at:teachernet.gov.uk/pensions

Universities Superannuation Scheme (USS)The USS is a defined benefits scheme which isexternally funded and contracted out of the StateSecond Pension. The assets of the scheme are heldin a separate trustee-administered fund. It is notpossible to identify the University’s share of theunderlying assets and liabilities in the scheme andhence, using the exemption under FRS 17,contributions to the scheme are accounted for as ifit were a defined contribution scheme. The cost,recognised within the deficit for the year in theincome and expenditure account, is equal to thecontributions payable to the scheme in respect ofthe accounting period.

The pensions cost is assessed every three years.The assumptions and other data that have the mostsignificant effect on the determination of thecontribution levels are as follows:

Latest actuarial valuation 31 March 2008Actuarial method Projected unit method

Past Futureservice serviceliabilities liabilities

Investment returnsper annum 6.4% 6.1%

Salary scale increasesper annum 4.3% 3.9%

Pensions increasesper annum 3.3% 2.9%

Market value of assets atdate of last valuation £28,842 million

Value of schemes technicalprovisions at date of lastvaluation £28,135 million

Surplus £707 millionProportion of member’saccrued benefits coveredby the actuarial value ofthe assets 103%

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Since 31 March 2008 global investment marketshave continued to fluctuate and at 31 March 2010the actuary has estimated that the funding levelunder the new scheme specific funding regime hadfallen from 103% to 91% (a deficit of £3,605 million).Compared to the previous twelve months, thefunding level has improved from 74% (as at 31March 2009) to 91%.

Surplus or deficits which arise at future valuationsmay impact on the institution’s future contributioncommitment. During the year, the employercontribution rate was increased to 16% with effectfrom 1 October 2009.

Local Government Pension Scheme (LGPS)The LGPS is regulated by statute, with separateregulations for (a) England and Wales and (b)Scotland. The benefits of the LGPS are determinednationally by regulation and meet the definition of adefined benefit scheme. It is a funded scheme, withsome ninety-nine separate funds administeredlocally by administering authorities. Each fund hasmany employing authorities. The HertfordshireCounty Council is the administering authority withthe District Councils in their County, and otherbodies, for example the University, being employingauthorities within that scheme. The University’swholly owned subsidiary company UniversitybusLimited, whose employees are members of theLGPS, is an admitted body to the fund. All otherwholly owned subsidiary companies contribute tothe scheme through the University. Staff employedby Exemplas Holdings Limited and its subsidiarycompanies are either members of the LGPS or aremembers of the group administered personalpension plan, which is a defined contributionscheme.

The LGPS is not therefore a national multi-employerscheme, but each separate LGPS fund is a multi-employer scheme.

Changes to the Local Government Pension Schemepermit employees retiring on or after 6 April 2006 totake an increase in their lump sum payment onretirement in exchange for a reduction in their futureannual pension. An allowance is included for futureretirements to elect to take 50% of the maximumadditional tax-free cash up and HMRC limits for pre-April 2008 service and 75% of the maximum tax-

free cash for post-April 2008 service.In calculating the scheme assets and liabilities, thefund's actuaries had to make a number ofassumptions about events and circumstances in thefuture. These assumptions represent the bestestimate of expected outcomes but it is possiblethat actual outcomes will differ from those includedin the accounts. Any differences between expectedand actual outcomes are reported throughexperience gains and losses.

The total contribution made to the LGPS for theyear ended 31 July 2010 was as follows:

Total Employer Employee£’000 £’000 £’000

University 7,271 5,469 1,802Universitybus 319 238 81Exemplas 92 73 19______ ______ ______

Total 7,682 5,780 1,902______ ______ ______

Employer contributions are affected by a surplus ordeficit in the scheme. All new entrants to the fundare now single status employees and there is nolonger any classification of officer and manualemployees. The agreed contribution rates for futureyears are:

Year ending31 March 2011 2012 2013University 19.2% 19.2% 19.2%Universitybus 18.6% 18.6% 18.6%Exemplas 27.5% 27.5% 27.5%Employees 5.25-7.5% 5.25-7.5% 5.25-7.5%

The estimated employer contribution payable for theyear ending 31 July 2011 is £5,331,000.

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32. Pension schemes (continued)

The following information is based upon a full actuarial valuation of the fund at 31 March 2007 updated to 31 July2010 by a qualified independent actuary.

2010 2009 2008Inflation and rate of increase in pension 3.0% 3.7% 3.8%Rate of increase in salaries 3.0% 5.2% 5.3%Expected return on assets 6.6% 6.0% 7.1%Discount rate for liabilities 5.8% 6.0% 6.7%

The pension and salary increase assumption is 1.5% for the first three years.

The current mortality assumptions include sufficient allowance for future improvements in mortality rates.The assumed life expectancy on retirement at age 65 are:

University and Exemplas Holdings Limited:Males Females

Current Pensioners 22.1 years 25.1 yearsFuture Pensioners 23.2 years 26.1 years

Universitybus Limited:Males Females

Current Pensioners 17 years 19 yearsFuture Pensioners 18 years 20 years

The assets in the scheme (of which the Group’s share is estimated at 4.98%) and the expected rates ofreturn were:

Long-term Long-term Long-termrate of return Value rate of return Value rate of return Value

expected 2010 expected 2009 expected 20082010 £’000 2009 £’000 2008 £’000

Equities 7.3% 1,500,000 7.3% 1,213,000 7.8% 1,431,000Bonds 4.8% 401,000 5.3% 373,000 5.7% 299,000Property 5.3% 85,000 5.3% 75,000 5.7% 99,000Cash 4.4% 127,000 4.3% 205,000 4.8% 186,000_________ _________ _________

Total market value of assets 2,113,000 1,866,000 2,015,000_________ _________ _________

The pension scheme liability detailed below also takes account of the University’s unfunded pension liability. Thisliability, which relates to pension enhancements payable to staff who have taken early retirement, was previouslyincluded in the accounts as a provision before the full adoption of FRS 17 in the year ended 31 July 2006.

2010 2009 2008 2007£’000 £’000 £’000 £’000

Group’s estimated asset share 105,244 87,893 94,234 95,664Present value of scheme liabilities (121,896) (142,544) (116,506) (107,434)Present value of unfunded liabilities (6,721) (8,242) (9,680) (10,536)________ ________ ________ ________

Deficit in the scheme (23,373) (62,893) (31,952) (22,306)________ ________ ________ ________

The pension scheme liability for the University was (£24,317,000) as at 31 July 2010.


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Analysis of the amount charged to income and expenditure account

2010 2009£’000 £’000

Service cost 5,040 4,477Past service cost - 79Curtailment and settlements 264 490_______ _______

Total operating charge 5,304 5,046_______ _______

Analysis of net return on pension assets2010 2009£’000 £’000

Expected return on pension scheme assets 5,838 6,842

Interest on pension liabilities (9,149) (8,555)_______ _______

Net charge on pension scheme (3,311) (1,713)_______ _______

Amount recognised in the statement of total recognised gains and losses (STRGL)

2010 2009£’000 £’000

Actual return less expected return on pension scheme assets 7,623 (17,311)Experience gains and losses arising on the scheme liabilities 1,273 2,004Changes in financial and demographic assumptions underlying thepresent value of liabilities 25,393 (15,255)Past service gain 8,066 -_______ _______

Actuarial gain/(loss) recognised in STRGL 42,355 (30,562)_______ _______

The amount of the actuarial gain relating to changes in financial assumptions for the year ended 31 July 2010 is£25,393,000 (2009: £15,255,000). The cumulative actuarial gain recognised in STRGL as at 31 July 2010 is £3,638,000(2009: loss of £38,717,000).

The past service gain of £8,066,000 has arisen as a result of the government’s announcement on 22 June 2010 thatfuture pension increases would be linked to CPI rather than RPI. The Group has recognised this amount in the Statementof Total Recognised Gains and Losses as management consider the resulting gain a change in actuarial assumption.

Movement in deficit during the year2010 2009£’000 £’000

Deficit in scheme at 1 August (62,893) (31,952)Current service cost (5,040) (4,477)Employer contributions 5,780 6,380Past service costs 8,066 (79)Curtailment and settlements (264) (490)Net return on assets (3,311) (1,713)Actuarial gain/(loss) 34,289 (30,562)_______ ________

Deficit in scheme at 31 July 23,373 (62,893)_______ ________

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Analysis of movement in the present value of the scheme liabilities2010 2009£’000 £’000

At 1 August 150,787 126,186Current service cost 5,040 4,477Contributions by members 1,902 1,986Past service costs (8,066) 79Curtailment and settlements 264 437Liabilities extinguished on settlements - (617)Interest cost 9,149 8,555Actuarial gain/(loss) (26,667) 13,251Estimated unfunded benefits paid (496) (480)Estimated benefits paid (3,296) (3,088)_______ _______

At 31 July 128,617 150,786_______ _______

Analysis of movement in the fair value of the scheme assets2010 2009£’000 £’000

At 1 August 87,894 94,234Contributions by members 1,902 1,986Employer contributions 5,284 5,900Contributions in respect of unfunded benefits 496 480Assets distributed on settlements - (670)Expected return on assets 5,838 6,842Actuarial gain/(loss) 7,623 (17,311)Estimated unfunded benefits paid (496) (480)Estimated benefits paid (3,297) (3,088)_______ _______

At 31 July 105,244 87,893_______ _______

History of experience gains and losses

2010 2009 2008 2007 2006£’000 £’000 £’000 £’000 £’000

Difference between the expectedand actual return on assets 7,623 (17,311) (11,770) 4,143 6,005

Percentage of scheme assets 7.2% (19.7%) (12.5%) 4.3% 7.3%

Experience gains/(losses) onscheme liabilities 1,273 2,004 (9) (1) (385)Percentage of scheme liabilities 1.2% 1.8% 0.0% 0.0% (0.3%)

Total actuarial gains/(losses)recognised in STRGL 42,355 (30.562) (8,611) 15,924 (2,215)Percentage of scheme liabilities 32.9% (20.3%) (6.8%) 13.5% (1.9%)

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Employers and employee total contributions

2010 2009Employer Employee Total Total

£’000 £’000 £’000 £’000

Contributions to TPS 5,808 2,788 8,596 8,791Contributions to LGPS 5,780 1,902 7,682 8,366Contributions to USS 32 20 52 62______ ______ ______ ______

Total contributions 11,620 4,710 16,330 17,219______ ______ ______ ______

33. Capital commitments2010 2010 2009 2009Group University Group University£’000 £’000 £’000 £’000

Contracted at 31 July 6,666 6,603 6,274 5,095Authorised but not contracted at 31 July 11,733 11,546 21,163 21,163______ ______ ______ ______

18,399 18,149 27,437 26,258______ ______ ______ ______

34. Access to Learning Funding2010 2009£’000 £’000

Balance at 1 August 14 10Funding council grants 433 502Interest earned 1 11______ ______

448 523

Disbursed to students (379) (494)Administration charges (13) (15)______ ______

Balance at 31 July 56 14______ ______

Access to Learning Funds are available solely for students; the University acts only as paying agent.The grants and related disbursements are accounted for as agency arrangements and are therefore excluded from theincome and expenditure account.

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35. Prior year adjustment

The prior year comparatives have been restated for the following reasons:

(i) A late gift aid adjustment in two of the subsidiary companies arose at the end of 2009 after the group accountshad been approved. This had no effect on the group accounts but was not reflected in the University’s ownaccounts. The total amount was £494,000. The movements in the prior year figures are outlined below.

(ii) Following the implementation of a new finance system, a detailed review of fixed assets was carried out toenable data to be transferred to the new fixed asset register. As a result of this review it was noted that sometransactions in earlier years had not been correctly accounted for in the University’s own accounts, includingdisposals of some assets and the treatment of a grant received. The movements in the prior year figures areoutlined below.

Group

Land and buildingsIncome and Deferred

Accumulated Revaluation expenditure capitalCost depreciation reserve account grants Debtors£’000 £’000 £’000 £’000 £’000 £’000

As previously reported 338,084 71,944 34,511 102,777 36,852 -Grant received and releaseup to 31 July 2009 - - (7,703) 1,763 5,940 -Asset disposals (7,496) (1,462) (2,487) (3,547) - -_______ _______ _______ _______ _______ _______

Restated 31July 2009 330,588 70,482 24,321 100,993 42,792 -_______ _______ _______ _______ _______ _______

UniversityLand and buildings

Income and DeferredAccumulated Revaluation expenditure capital

Cost depreciation reserve account grants Debtors£’000 £’000 £’000 £’000 £’000 £’000

As previously reported 250,632 51,760 33,371 111,902 36,852 7,159Grant received and releaseup to 31 July 2009 - - (7,703) 1,763 5,940 -Asset disposals (7,496) (1,462) (2,487) (3,547) - -Gift aid adjustmentas above - - - 494 - 494_______ _______ _______ _______ _______ _______

Restated 31July 2009 243,136 50,298 23,181 110,612 42,792 7,653_______ _______ _______ _______ _______ _______

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36. Related party transactions

All transactions detailed below were undertaken at an arms length basis in accordance with the normal agreementsbetween customers and suppliers.

Name of entity AmountValue of services Value of services outstanding

delivered received at 31 July 2010

Year ended 31 July 2010

University of Hertfordshire Students’ Union £166,000 £1,202,000 £9,000East of England IDB Limited £2,056,000 - -Yorkshire & Humberside IDB Limited £1,775,000 - -

Year ended 31 July 2009

University of Hertfordshire Students’ Union £849,000* £14,000 £4,000East of England IDB Limited £1,081,000 - £271,000Yorkshire & Humberside IDB Limited £242,000 - £17,000

* This includes the 2009/10 Students’ Union Subvention of £650,000 (2009:£585,000) and £200,000 (2009:£nil) in respectof student union facilities.

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Board of Governors

Memberships from 1 August 2010

Board of Governors

Independent MembersMrs J L Connell (Chairman)His Honour Judge Baker (from 1.9.10)Ms Y Batliwala (from 1.9.10)Mr P L Block (from 1.9.10)Professor M ElvesThe Rt Revd C R J Foster (to 31.8.10)Mr D J GoodridgeMr C J GordonMr A P GrahamMr J T Harrison (to 31.8.10)Mr J K HeywoodMr N F MatthewsMr G MorrisonMr J F H ParkLady Staughton

Vice-ChancellorProfessor R J T Wilson

Member nominated by the Academic BoardMrs L Karstadt (from 1.9.09)

Students’ UnionMiss D S E Hamlet (to 30.6.10)Ms P F de Koenigswarter (from 1.7.10)

Co-opted MembersHis Honour Judge Baker (to 31.8.10)Mr P L Block (to 31.8.10)Mr R I N Gordon (from 1.9.10)Ms L B Haye (to 31.8.10)Mr N B Lawler (from 22.1.10)Miss J L McCueDr L MitchellDr D A Neil (from 1.9.10)Dr A V Stokes

Audit Committee

Mr J T Harrison (Chairman) (to 31.8.10)Mr J K Heywood (Chairman) (from 1.9.10)Mr D J Goodridge (to 31.8.10)MR A P GrahamMr N F MatthewsDr L MitchellDr A V Stokes

Remuneration Committee

Mrs J L Connell (Chairman)Mr P L Block (from 1.9.10)The Rt Revd C R J Foster (to 31.8.10)Mr C J GordonMr J T Harrison (to 31.8.10)Mr J K Heywood (from 1.9.10)Mr N F MatthewsLady Staughton

Finance and General Purposes Committee

The Rt Revd C R J Foster (Chairman) (to 31.8.10)Mr C J Gordon (from 1.9.10)Ms Y Batiwala (from 1.9.10)Mr P L BlockMrs J L ConnellProfessor M ElvesMr D J Goodridge (from 1.9.10)Mr J K Heywood (to 31.8.10)Miss J L McCueMr G MorrisonMr J F H ParkProfessor R J T Wilson

Bankers

Barclays Bank Plc, St Albans

Auditors

Grant Thornton UK LLPChartered Accountants and Registered AuditorsMilton Keynes

The above committees have a direct responsibilityfor the financial activities of the University.

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Professor Tim WilsonVice-ChancellorPhD CCMI FRSA

Tim Wilson was appointed Vice-Chancellor in 2003. He is responsiblefor the day-to-day running of the University; the delivery of strategicand operational plans; and staff and student discipline.

Tim Wilson is acknowledged for his progressive thinking on university/business collaboration.Under his direction, the University has become the UK’s leading business-facing university.He has served on several national working parties in the field of knowledge transfer andintellectual property.

He worked in industry as an analyst before developing a career in academia. He heldpositions at the now Leeds Metropolitan, Cranfield and de Montfort universities, as well asvisiting positions at the École Supérieure de Commerce et d'Administration in Dijon, France,and the Fachhochschule Wirtschaft in Pforzheim, Germany.

After nineteen years at the University, Professor Wilson will retire from his post as Vice-Chancellor at the end of 2010.

Professor Graham GalbraithDeputy Vice-ChancellorBSc MSc PhD CEng MCIBSE ILTM

Graham Galbraith was appointed Deputy Vice-Chancellor in 2008. Hehas responsibility for research; academic planning and staffing; staffdevelopment; international and regional partnerships anddevelopments; induction and retention of international students.

Since 2005 he had been Pro Vice-Chancellor at Glasgow Caledonian University. During histwelve years at Glasgow Caledonian he also held the position of Dean of the School ofEngineering, Science and Design. He was previously at the University of Strathclyde.

Professor Galbraith is a prolific researcher, particularly active in applied research. He has aleading reputation in the study of condensation in buildings, and has a strong track record inresearch income generation.

Members of the executive team

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Members of the executive team

Philip WatersSecretary and RegistrarBSc FRSA

Philip Waters was appointed Secretary and Registrar in 2001. He isresponsible for the management and operation of the Board ofGovernors and the Academic Board; compliance with Universitypolicies, regulations and procedures; legal matters of the University andits wholly-owned subsidiaries.

He joined the University in 1989 as Deputy Secretary and Registrar. Previous roles include asan Administrator with the then Greater London Council; senior administrative positions withinfurther and higher education colleges; and Senior Assistant Secretary of Thames Polytechnic(now the University of Greenwich).

Alistair MoffatGroup Finance DirectorBA FCMA

Alistair Moffat was appointed Group Finance Director in 2009. He hasresponsibility for all aspects of financial management within the Groupincluding financial control, statutory reporting, treasury, tax, insuranceand commercial financial support for the academic community. Hisrole also incorporates board responsibility for the management of the

Estate, and he attends several of the board committees, also chairing UH Holdings Ltd whichoversees the commercial subsidiaries in the Group.

He joined the University from Monarch Airlines where he was Chief Financial Officer. Previousroles in industry include: Finance Director Scotland at First Group Plc; Finance Director atAlstom Signalling Ltd; a number of senior finance positions within British Rail; and FinanceDirector at Mainline Freight Limited, through the rail privatisation process.

Graduating in Accounting and Finance, he then qualified as an accountant in 1989 and is nowa Fellow of the Chartered Institute of Management Accountants.

The above listed members of the executive team have a direct responsibility for the financialactivities of the University.

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List of major donors

de Havilland Circle

The Estate of Kurt DannenbergMrs Josephine ConnellMrs Caroline CrawshawMr Richard & Mrs Jacqui DanielsMr Colin and Mrs Sue GordonMr David LaingDr Brian MayMr Tony MooreMr Gordon and Mrs Mary MorrisonMr Terry NevilleSir Christopher and Lady StaughtonDr Richard and Mrs Susie WalduckProfessor Tim and Mrs Jackie Wilson

de Havilland Fellows

Mr Simon Bryan QCMr Nick BrookingSir Anthony Colman QCMrs Miki ColneDr Denis and Mrs Pamela FilerMr John HeywoodMr Ian HumphriesMr Christopher LaingMr Harry Morton NealKeith Murray Rutherford Memorial FundDr Julia SchofieldHis Honour Eric StockdaleMr John and Mrs Diana UffMr and Mrs Michael and Janie Wentworth-Stanley

Chancellors Circle

Jarvis Group LtdGarfield Weston Foundation

Vice-Chancellors Circle

A&RWoolf Charitable TrustBeds Bucks and Herts Society of CharteredAccountantsBrocket HallCarlton Travel GoodsClydesdale BankCaribbean Women’s Equality and Diversity ForumDebenhams OttawayEnterprise Rent-A-CarExemplasGeoffrey de Havilland Flying FoundationHertfordshire Chamber of CommerceHertfordshire County CouncilHertfordshire Educational FoundationThe Lord and Lady Lurgan TrustMark Master Masons of HertfordshireMicrosoftMundy CruisingNADFASProvincial Grand Lodge of HertfordshireRMJMROKO Cancer CharityRoyal Aeronautical Society (Hatfield Branch)Scotia UK plcScott & York Intellectual PropertySt Johns Church, LemsfordShellSun Mark LtdTaylor WaltonTesco plcThe Legacy PartnershipT-Mobile LtdTwin Technology LimitedWatford & NW London Business AwardsWillmott Dixon Group

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